f 




C!ass__ "^ali 



Book 






Marketing and Farm Credits 



A COLLECTION OF PAPERS AND DOCUMENTS READ 
AT THE FOURTH ANNUAL SESSIONS OF 



The National Conference on Marketing 
and Farm Credits 



IN CHICAGO 



AT THE HOTEL SHERMAN 
DECEMBER 4-9, 1916 



PRICE $2.00 






Marketing and Farm Credits """"^ 



A COLLECTION OF PAPERS AND DOCUMENTS READ 
AT THE FOURTH ANNUAL SESSIONS OF 



The National Conference on Marketing 
and Farm Credits 



IN CHICAGO 



AT THE HOTEL SHERMAN 
DECEMBER 4-9, 1916 



PRICE $2.00 



fe'^'-- 



'i'%'^- 






Copyright 191" 

AND 

Published by 

THE NATIONAL CONFERENCE ON.MARKETING 
AND FARM CREDITS 

Office of Secretary 

Suite S40 WashingtonlBuilding 

Madison, Wisconsin 



MAY I C 1917 



fe^CU460649 



TABLE OF CONTENTS 

Page 

Title Page i 

Copyright ii 

Table of Contents iii 

Presiuixg Officers vi 

General Committee viii 

State Directors x 

Foreword xii 

PURPOSE AND SCOPE OF CONFERENCE 

¥/0RK OF 1916 Meeting 

Chairman Frank L. McVey, Grand Forks, N. D 1 

THE FEDERAL FARM LOAN ACT AND PERSONAL CREDIT 

"Working of the Federal Farm Loan Act 

James B. Morman, Kensington, Md 7 

How Credit Unions Work 

William R. Camp, West Raleigh, N. C 50 

Credit Problems or the South 

Lewis Cecil Gray, Nashville, Tenn 59 

Fundamental Principles 

Robert D. Kent, Passaic, N. J 73 

Cooperative Credit in Canada 

Alphonse Desjardins, Quebec, Can 78 

LAND SETTLEMENT AND IMMIGRATION 

Land Settlejient A Public Question 

Elwood Mead, Berkeley, Cal 101 

Land Settlejient in the Northern States 

E. Dana Durand, University Farm, St. Paul, Minn 113 

Land Settlement for the Pacific, Northwest 

Hector MacPherson, Corvallis, Ore 126 

Supervising Coimmercial Colonization 

Max Loeb, Chicago, 111 146 

Immigration and the La.nd Question 

Frederick C. Howe, Ellis Island, N. Y 155 

Financing the Insolvent Farmer 

Leonard G. Robinson, Sprin^eld,; Mass^ 177 



iv TABLE OF CONTENTS 

MARKETING OF LIVESTOCK 

Page 
Why Investigate the Livestock Industry? 

E. L. Burke, Omaha, Nebr 191 

The Livestock Industry and National Welfare 

Edward C. Lasater, Faliurrias, Tex 199 

Present Status of Livestock Industry 

T. W. Tomlinson, Denver, Colo 212 

Why a Federal In\t:stigation Is Necessary 

Dwight B. Heard, Phoenix, Ariz 220 

Why Probe the Livestock Industry? 

A. E. de Ricqies, Denver, Colo 223 

Any Qualities in Marketing Livestock 

J. B. Kendrick, Cheyenne, Wyo 237 

Why Livestock Prices Change 

George K. Andrews, St. Louis, Mo 240 

Federal Market News Service 

Louis D. Hall, Washington, D. C 248 

TlLE Livestock Exchanges 

M. L. McClure, Kansas City, Mo 261 

Cooperative Livestook Shipping Associations 

S. S. Beach, Hutchinson, Minn 268 

The Cooperative PacivIng Plant at Rockford, III. 

F. A. Bingham, Rockford, 111 278 

Cooperative Packing Plants 

Charles W. Holman, Madison, Wis 286 

Livestock Marketing in Canada 

W. J. Rutherford, Saskatoon, Can 301 

MARKETING OF GRAIN AND CHEESE 

Grain Marketing Problems of the Northwest 

Lynn J. Frazier, Hoople, N. D 309 

Necessary Costs at Country Stations 

F. W. Stout, Ashkum, 111 322 

Boards of Trade and National Welfare 

John R. Mauff, Chicago, 111 326 

Costs in Exporting Grain 

Julius H. Barnes, Duluth, Minn 338 

Cooperation in Cheese Sales 

Henry Krumrey, Plymouth, Wis 347 

MARKETING OF PERISHABLE FARM PRODUCTS AND MILK 
Solving Kentucky's Market Problems 

Fred Mutchler, Lexington, Ky 357 

Selling Michigan Certified Grapes 

George E. Prater, Jr., Paw Paw, Mich 365 



TABLE OF CONTENTS v 

Page 

How Maixe Farmers Sell Their Crops 

C. E. Embree, Waterville, Me 374 

The Auction Method of Selling Fruits and Vegetables 

Victor K. McElheny, Jr., New York City 383 

Marketing Whole Milk 

H. E. Horton, Chicago, 111 401 

The Nkw York Milk Fight 

Gwendell Bush, Little Falls, N. Y 409 

Marketing Milk in Twin Cities 

K. A. Kirkpatrick, Minneapolis, Minn 418 

Discussion of Milk Marketing 421 

Bylaws of the National Milk Producers' Federation 430 

THE ORGANIZATION OF AGRICULTURE 

The Cost of Living and the Remedy 

Charles McCarthy, Madison, Wis 435 

A Basis of National Agricultural Organization 

Kenyon L, Bntterfield, Amherst, Mass 445- 

Organizatoon and Price Making 

J. N. McBride, East Lansing, Mich 449 

The Unification of American Agriculture 

Carl Schurz Vrooman, Washington, D. C 462 

National Service Institution for Farmers 

Charles A. Lyman, Rhinelander, Wis 470 

First Aid to Farming Business 

Charles W. Holman, Madison, Wis 472 

Announcement of N. A. 0. S 492 

Bylaws of N. A. 0. S 495 

BUSINESS PROCEEDINGS 

Conference Resolutions 507 

Accredited Delegates 515 



vi TABLE OF CONTENTS 

PRESIDING OFFICERS 

FOURTH ANNUAL SESSIONS 

CONFERENCE ON THE WORKING OF THE FEDERAL FARM LOAN 
ACT, December 4, 8 p. m., Louis XVI Room. 

Fraxk L. McVey, chairman, The National Conference on Market- 
ing and Farm Credits; president, Tlie University of North Dakota, 
Grand Forks, North Dakota. 

CONFERENCE ON THE WORKING OF THE FEDERAL FARM LOAN 
ACT, December 5, 9:15 a. m., Louis XVI Room. 

Thomas N. Carver, Former Chief, Office of Rural Organization, 
United States Department of Agriculture; Professor of Economics, 
Harvard University, Cambridge, Massachusetts. 

CONFERENCE ON LAND SETTLEMENT, December 5, 10:15 a. m., 
Louis XVI Room. 
THoaiAS N. Carver. 

CONFERENCE ON THE MARKETING OF WHOLE MILK, Decem- 
ber 5, 1:30 p. m., Louis XVI Room. 

B. H.HiBBARD, Professor of Rural Economics, The University of 
Wisconsin, Madison, Wisconsin. 

CONFERENCE ON LAND SETTLEMENT, December 5, 1:30 p. m.. 
Crystal Room. 

Thomas N. Carver. 

CONFERENCE ON THE MARKETING OF PERISHABLE FRUIT 
AND VEGETABLE PRODUCTS, December 5, 1:30 p. m.. West 
Room. 

Lou D. Sweet, President, The Potato Grow^ers' Association of 
America, Denver, Colorado. 

CONFERENCE ON THE MARKETING OF LIVESTOCK, December 6, 
(all day), Louis XVI Room. 
Fraxk L. McVey. 

CONFERENCE ON COLONIZATION AND IMMIGRATION QUES- 
TIONS, December 7, 9:15 a. m., Louis XVI Room. 

Graham Taylor, Head of the Commons, Chicago, Illinois. 

CONFERENCE ON THE MARKETING OF LIVESTOCK, continued: 
December 7, 9 : 15 a. m., Crystal Room. 

Thomas Cooper, Director, Agricultural Experiment Station, 
Fargo, North Dakota. 

CONFERENCE ON COLONIZATION AND IMMIGRATION QUES- 
TIONS, continued; December 7, 1:30 p. m., West Room. 
Thomas N. Carver. 

CONFERENCE ON COST FINDING IN THE CO-OPERATIVE MAR- 
KETING OF GRAIN, December 7, 1:30 p. m., Louis XVI Room. 

Charles Adkixs, Former Speaker, Illinois Assembly; president, 
Illinois Livestock Breeders' Association, Bement, 111. 



TABLE OF CONTENTS vii 

CONFERENCE ON THE ORGANIZATION OF AGRICULTURE, De- 
cember 7, 8 p. m. 

Colonel Frank P. Holland, Publisher, Farm and Ranch and Hol- 
land's Magazine; Founder of the National Conference on Market- 
ing and Farm Credits, Dallas, Texas. 

CONFERENCE ON COST FINDING IN THE CO-OPERATIVE MAR- 
KETING OF GRAIN, continued; December 8, 9:30 a. m., Louis 
XVI Room. 

Thomas Daniels, Secretary, Farmers' Grain Dealers' Associa- 
tion of Kansas, CuUison, Kansas. 

BUSINESS SESSIONS- 
FRANK L. McVey. 



TABLE OF CONTENTS 



GENERAL COMMITTEE OF THE CONFERENCES 

FBank L. MoVey, chairman; president, University of North Dakota; 
Grand Forks, North Dakota. 

Charles McCarthy, treasurer; chief. Legislative Reference Library; 
Madison, Wisconsin. 

M. R. Myers, assistant treasurer; editor, American Cooperative Jour- 
nal; Chicago, Illinois. 

Charles W. Holman, secretary; secretary, The National Agricultural 
Organization Society; Madison, Wisconsin. 

Charles A. Lymak, assistant secretary; general organizer. The Na- 
tional Agricultural Organization Society, Madison, Wisconsin. 

Frank P. Holland, publisher, Farm and Ranch; Dallas, Texas. 

GiFFORD PiNCHOT, conscrvatiouist ; Philadelphia, Pennsylvania. 

Arthltr Capper, governor, state of Kansas, publisher, the Capper Farm 
Papers; Topeka, Kansas. 

Herman W. Danforth, president. National Council of Farmers' Co- 
operative Associations; Washington, Illinois. 

Thomas Cooper, director, North Dakota Agricultural Experiment Sta- 
tion; Fargo, North Dakota. 

W. L. Ames, farmer; member. Executive Committee Farmers' National 
Congress; Oregon, Wisconsin. 

J. M. Caffrey, sugar planter; Franklin, Louisiana. 

L. D. H. Weld, professor of business administration, Yale University; 
New Haven, Connecticut. 

E. M. TousLEY, editor and lecturer on cooperation; American Roch- 
dale League; Minneapolis, Minnesota. 

Clarence Poe, president. Progressive Farmer Papers; Raleigh, North 
Carolina. 

H. J. Hughes, editor. Farm Stock and Home; Minneapolis, Minnesota. 

Frank E. Long, publisher, The Farmers' Review of Chicago and the- 
Stockman and Farmer of Pittsburg, Pennsylvania; Chicago, Illinois. 

George W. Simon, western agent, Jewish Agricultural and Industrial 
Aid Society, Chicago, Illinois. 

John Lee Coulter, dean, College of Agriculture and director of Agri- 
cultural Experiment Station, University of West Virginia; Morgan- 
town, West Virginia. 

Charles S. Barrett, president, The Farmers' Educational and Cooper- 
ative Union of America; Union City, Georgia. 

Lou D. Sweet, farmer; Denver, Colorado. 

Herman W. Danforth, president. National Council of Farmers' Co- 
operative Associations; Washington, Illinois. 



TABLE OF CONTENTS ix 

James C. Caldwell, president, First National Bank of Lakefield; 
farmer and cooperator; Lakefield, Minnesota. 

H. J. Waters, president, Kansas State Agricultural College; Manhat- 
tan, Kansas. 

E. T. Meeedith, publisher. Successful Farming; Des Moines, Iowa. 

H. C. Sampson, Lincoln Trust Co., Spokane, Washington. 

Henry C. Wallace, editor, Wallace's Farmer; Des Moines, Iowa. 



TABLE OF CONTENTS 



STATE DIRECTORS-! 91 6 

(INCOMPLETE) 

Max Reiberg, faimer; Cullman, Alabama. 

Elwood Mead, professor in charge, Department of Rural Institutions, 

University of California; Berkeley, California. 
H. Hayward, dean and director, Department of Agriculture; Newark, 

Delaware. 
C. 0. Holmes, colonization worker; Bristol, Florida. 
G. R. HiTT, State Banking Department; Boise, Idaho. 

A. B. HoLBERT, horse importer and breeder and farmer; Greeley, Iowa. 
Chester A. Lei>bach, farmer; Onaga, Kansas. 

S. M. Jo>'ES, farmer; Laurel, Mississippi. 

J. N. McBride, state market director; East Lansing, Michigan. 

FuLTo^^ H. Sears, farmer; Fallon, Nevada. 

W. R. Camp, chief, Division of Markets and Rural Organization, Caro- 
lina Experiment Station and Extension Service; West Raleigh, 
North Carolina. 

J. W. Wilson, farmer and banker; Stromsburg, Nebraska. 

G. N. Lauman, staff Cornell University; Ithaca, New York. 

J. H. Harpster, farmer; Millesburg, Ohio. 

Carl Williams, editor Oklahoma Farmer & Stockman; Oklahoma City, 
Oklahoma. 

L. P. Bellah, general agent, Nashville, Chattanooga & St. Louis Rail- 
way, Nashville, Tennessee. 

F. S. Brigham, commissioner of agriculture; St. Albans, Vermont. 

H. E. Williams, commissioner of agriculture; Charleston, West Vir- 
ginia. 

Henry Krumrey, president, Sheboygan County Cheese Producers' Fed- 
eration; Plymouth, Wisconsin. 

Lewis Kilker, Farmers' Cooperative Grain Company; Britton, South 
Dakota. 

E. S. Bayard, editor. The National Stockman and Farmer; Pittsburgh, 
Pennsylvania. 

Walter W. Head, banker and farmer; St. Joseph, Mo. 
James A. King, editor. The Farming Business; Chicago, Illinois. 
Andrew L. Felker, commissioner of agriculture, farmer; Concord, New 
Hampshire. 

F, F. GiLMORE, publisher, Kentucky Farming; Louisville, Kentucky. 

B. C. Hernandez, congressman; Santa Fe, N. M. 

Robert D. Kent, president. Merchants' Bank of Passaic; Passaic, New 
Jersey. 



TABLE OF CONTENTS xi 

Axsox Secoe, editor, Successful Farming; Des Moines, Iowa. 

Henry A. Knight, dean, College of Agriculture and Director Experi- 
ment Station, University of Wyoming; Laramie, Wyoming. 

Frank N. Beiggs, president. Interstate Trust Co.; Denver, Colorado. 

Dan a. Wallace, editor. The Farmer, St. Paul, Minn. 

C. E. Embree, manager, Farmers' Union of Maine; Waterville, Maine. 

James B. Boyle, field agent in marketing, Agricultural EJxperiment 
Station of North Dakota; Fargo, N. D. 

Louis B. Magid, president, The Appalachian Apple Orchards; Tallulah 
Park, Georgia. 

Howard Edwards, president. The Rhode Island State College; King- 
ston, Rhode Island. 

W. H. Manss, assistant to vice-president. The Baltimore and Ohio 
Railroad Co.; Baltimore, Maryland. 

C. I. Hammet, farmer and short-horn breeder; Crawfordsville, Indiana. 

Wilfred Wheeler, secretary, Massachusetts State Board of Agriculture; 
Boston, Massachusetts. 

J. W. Steoud, secretary, Ozark Fruit Growers' Association; Rogers, 
Arkansas. 

Ralph D. Hetzel, director extension service. State A"gricultural Col- 
lege; Corvallis, Oregon. 

W. L. Beers, 2702 Second Avenue, Great Falls, Montana. 



FOREWORD 

THE 1915 volume of the National Conference on Marketing 
and Farm Credits sounded a new note in the literature of 
agricultural economics. The 1916 volume, now presented 
to the public, marks the transition in economic thought from the 
theoretic to the practical. Former speakers of the Conference 
dwelt largely upon what ought to be done. But in 1916 the 
General Committee made an effort to secure speakers who could 
tell how to do those things that may be necessary to the national 
welfare insofar as they might relate to the solution of the Ameri- 
can land question and to the future organization of agricultural 
cooperation. 

This volume, we believe, presents an advance in agricultural 
conceptions, and voices sane constructive thoughts with re- 
gard to the working out of coordinated national and state poli- 
cies for solution of land settlement, landlord and tenant, farm 
credit, personal credit and kindred problems, and for the en- 
couragement of the business side of farming by agricultural 
cooperation. 

The attendance at the 1916 Conference exceeded all former 
records, about 2,000 persons being present, and over 2,000,000 
farmers represented. Each general and sectional meeting was 
rich in free discussion and the quantity of it was so great as to 
make it impossible for the Committee to incur the expense of 
publishing everything that was said. 

The Committee also feels some gratification in being able to 
point to the fact that the Congress of the United States has re- 
cently appropriated $250,000 for the Federal Trade Commission 
to investigate the livestock industry as was urged by the speakers 
at this Conference and by the resolutions adopted. A long line 
of agricultural progress may be traced as a result of the move- 
ments and ideas which the delegates to the Conference have pio- 
neered, or supported. 



FOURTH NATIONAL CONFERENCE ON 
MARKETING AND FARM CREDIT 

Frank L. McVey * 

For the fourth time delegates have assembled in Chicago un- 
der the banner of the National Conference on Marketing and 
Farm Credits. In that period this Conference has come to be 
recognized as the one great national body interested in and 
concerned about the agricultural and marketing problems of 
the Nation. The attendance upon the Conferences has steadily 
grown. In the tirst gathering 34 states were represented, in 
the second delegates from 38 states were present, in the third 
46, and in this one practically every state in the Union will 
be represented. In numbers, too, there has been a great gain. 
As near as the officers of the Conference can count in advance 
of the present meeting, no less than 2,000 representatives of 
farmers' organizations will be present during the meeting. So, 
in all seriousness there is gathered here from all parts of Amer- 
ica, an intelligent, serious-minded group of men and women, 
to give consideration to some of the most important questions 
that confront our people. 

Work of Last Three Conferences 

The program of the first Conference was given over to a dis- 
cussion of conditions affecting the sales of the principal farm 
products and the problems of transporting them to markets. 
The second program began the consideration of some of the 
legislation that was then being presented to Congress, and ex- 
tended its grasp of the problems of marketing that had been 
discussed in the previous meeting. When the third Confer- 
ence was called, the advance made in public opinion and new 
legislation was to l)e seen in the topics under discussion. The 

* Dr. Frank L. McVey has served for three years as chairman of 
the National Conference on Marketing and Farm Credits. He is an 
economist of repute and president of the University of North Dakota, 
Grand Forks, N. D. 



2 MARKETING AND FARM CREDITS 

-dominant thought of this Conference was centered on the need 
for a wise federal and state land policy, the need of better 
financing of the operations of the farmer and more specific 
suggestions as to the method of accomplishing it. The fourth 
Conference, which we are now entering upon, will give specific 
■consideration to the workings of the Federal Farm Loan Act, 
liaving in mind definite and specific suggestions for making it 
more workable and satisfactory. The delegates will be asked 
to devise a comprehensive land settlement policy for the United 
States. The marketing section lias brought to your attention 
in a unique way the needs of certain phases of agricultural in- 
dustry, such as livestock, whole milk and various perishable 
fcrops. It is hoped to put forward without rancor or any bias 
some of the facts that will throw light upon these phases of 
agricultural industry. Without doubt this Conference will 
make advances over the one that has preceded it. The Confer- 
ence has led American thought, as can be seen by a comparison 
of the former with the present national attitude toward agri- 
culture. 

Work of the N. A. 0. S. 

At the last session of the third Conference provision was 
made for the establishment of what was called a National Agri- 
cultural Organization Society. The idea that the Conference 
had in establishing this agency was to provide some means by 
which societies might be organized along cooperative lines and 
work might be done on the larger questions of public policy 
affecting agriculture. The purpose in carrying out this work 
was stimulated by the success of the Irish Agricultural Organ- 
ization Society, which now has 110,000 farmers bound together 
in 1,100 cooperative societies. Nothing is more certain than 
the need for information and direction in the organization of 
-cooperative enterprises. At present there are scattered agencies 
-doing the work here and there. The National Agricultural Or- 
ganization Society will make the contribution, not only of prop- 
aganda, but of knowledge regarding the law and legal form of 
such organizations. The services of organized and well trained 
legal men will be at the disposal of the societies that are af- 
filiated with the organization. This organization is closely 



FRANK L. McVEY 3 

identified with the Conference. It will need more funds and a 
great deal of support by a cooperative relationship among the 
different societies which the delegates to this Conference rep- 
resent. I bespeak for it your cooperation and endorsement, 
and through this agency there ought to be established better 
things in the field of agriculture. 

It was the hope of the officers of the Conference that Sir Hor- 
ace Plunkett might have been the guest of the Conference but 
matters of great importance keep him on the other side and he 
will not arrive in America until the end of the present week. To 
him, however, goes the appreciation and good will of the Con- 
ference. 

I distinctly have the feeling that much will be accomplished 
in this meeting, that progress will be made, and that the reso- 
lutions of this Conference will have a marked influence, not 
only among us here, but in the halls of legislative bodies. It 
is, therefore, with pleasure and confidence that I open the 
Fourth National Conference on Marketing and Farm Credits. 



THE FEDERAL FARM LOAN ACT AND 
PERSONAL CREDIT 



WORKING OF THE FEDERAL FARM LOAN ACT 

James B. Morman * 

In discussing the question of rural credits, as it bears upon 
this act, we must not forget that there are two phases — mort- 
gage credit and personal credit. This act deals only with one 
phase, the mortgage credit, and I don't think that is the more 
important phase. At least, it does not raise as many problems 
as the personal credit phase and that may be a reason why per- 
sonal credit has not been taken up by Congress yet. 
- In discussing this act, or the workings of this act, I want 
if I can tonight to get right at the core of this matter. This 
act sets forth two systems, a cooperative system and an individ- 
ualistic or capitalistic system. The cooperative system is out- 
lined by means of 12 federal land banks, which will be located 
in the 12 federal districts that the Federal Farm Loan Board is 
now attempting to map out. These federal land banks will deal 
with what are known as national farm loan associations. These 
associations are groups of farmers. They can be organized with 
not less than 10 members. They come in as borrowers. They 
form their local organization and they apply for loans* to the 
federal land bank of their particular district. 

In connection with this cooperative system we have what are 
known as agents of the federal land banks. These agents may 
be any state bank or mortgage institution to which a farmer can 
go as an individual borrower and ask for a loan of the federal 
land bank of that district. He then as a borrower, through the 
agent, reaps the benefit of the Federal Farm Loan Act in pre- 
cisely the same manner as if he joined a national farm loan 
association. 

Now, these three things together form the cooperative plan. 
I outline them to you briefly in this way, and we will discuss 
it later. 



* James B. Morman is editor of and represented the Federal Farm 
Loan Board at the conference. 



8 MARKETING AND FAJRM CREDITS • 

Delaying: Formation of Joint Stock Banks 

Standing over against this is the capitalistic plan. The law 
provides for the establishment of joint stock land banks. These 
are supposed to be organized by capitalists, but the objects of 
these joint stock land banks are precisely the same as the federal 
land banks. They are to make farm mortgage loans and to 
make farm mortgage loans only. 

Now, what is the situation with reference to these two sys- 
tems that have been instituted by this act? The joint stock land 
banks will not be operative as a capitalistic sj^stem for some 
time. The Federal Farm Loan Board has passed resolutions 
to this effect, that no joint stock land bank shall be chartered 
until the federal land bank system has been instituted. The 
resolutions are these : 

First, that no charter will be granted to any joint stock land 
l)ank in the organization of which there has been any expense 
for promotion. That is to say, the law provides that the joint 
stock land banks shall be established by capitalists with a capital 
of $250,000, of which one-half shall be paid in cash and the 
other half subject to call by the board of directors. 

Now, there is nothing in the act that provides that any expense 
shall be given for promotion purposes ; but many capitalists and 
others, realizing the importance of the provisions of the act 
relating to these institutions, began organizing long before the 
act was passed in expectation that they would come in and get 
a government charter to reap the benefits of this system. The 
result was that considerable money was spent in promotion 
purposes. A great many of them sought for stockholders, far- 
mers, right the reverse from what was intended by the law, 
which was that the stockholders should be capitalists. The 
result was that the board felt that if the joint stock land banks 
were granted charters they would come in and occupy the field 
to the detriment of the farmers. Consequently, they passed 
that first resolution. Connected with that is this : 

"Second, that the consideration of charters for joint land 
stock land banks will be deferred until the completion of the 
organization of the federal land banks." The third resolution 
I will not read because it is not verv material. 



JAMES B. MORMAN 9 

Defects of Cooperation System 

That leaves us then open for the present discussion, the co- 
operative system. I wish to call your attention right here to 
the fact that the section authorizing agents of federal land 
banks cannot be operative by the provisions of the law itself 
until the act has been in effect one year, and that will not be 
until July 17th, 1917. That fact is not the most unfortunate 
part of that provision. Section 15 is the section relating to the 
appointment of agents, and I want to point out to you tonight 
the defect of this provision. That part of the section which 
renders this section entirely inoperative at the present time 
will, in my judgment, call for an amendment which I think 
should be passed by this body as representative of American 
farmers and be presented or sent to the Federal Farm Loan 
Board, and by it presented to Congress and have it passed this 
session. Section 15, the paragraph relating to this question, 
reads as follows: 

"Federal land banks may pay to such agents the 
actual expense of appraising the land offered as secur- 
ity for a loan, examining and certifying the title there- 
of, and making, executing and recording the mortgage 
papers." 

Now, that is all very good, but it adds this : 

"And, in addition, may allow said agents not to 
exceed one-half of one per cent per annum upon the 
unpaid principal of said loan, such commission to be 
deducted from dividends payable to the borrower on 
his stock in the federal land bank." 

Now, if you will do a little figuring you will find that the 
commission allowed to the agent by the federal land bank will 
be more than double any prospective dividends to be derived 
from the stock held by the borrower in the federal land bank. 
For example; suppose a farmer borrows $1,000 and on his first 
payment of his installment and interest he pays, we will say, 
$100 on the loan. That leaves $900, the unpaid balance of his 
debt. Now one per cent of $900 is $9, and one-half of one per 
cent would be $4.50. Now, then, the farmer when he asks for 



10 MARKETING AND FARM CREDITS ' 

a loan of $1,000 must, according to the law, subscribe for five 
per cent of his loan in the stock of the federal land bank, so 
that on a loan of $1,000 he must subscribe for $50 worth of 
stock in the federal land bank. 

Now, let us assume that he is going to get dividends. We 
are not sure that he is ; but we will assume that he is going 
to get dividends from the federal land bank and he gets a 
dividend of six per cent. Well, his six per cent on his $50 
will make $3 a year coming to him as dividends, -so that while 
he is entitled to $3, the bank that endorses his loan is entitled 
to $4.50. Where are they going to get the $4.50 out of $3.00? 
That is the problem that is raised in that section. In my judg- 
ment it is an excellent section ; it enables the farmer who stands 
alone in sections where national farm loan associations will not 
be formed to reap the benefits of this cooperative system. He 
will go to the bank nearest to him, a state bank. That bank 
can be designated as an agent and he can get his loan through 
that bank of the federal land bank of his district. That section 
should be there, because it will carry to every farmer in the 
United States sooner or later the benefits of this great act; 
and I for one would like to see this section so revised that it 
will work successfully and carry the benefits of this system to 
every individual farmer who does not or cannot belong to a 
national farm loan association. 

The cooperative system as we have here outlined, a mortgage 
system, is confined now to two institutions, the federal land banks 
and the national farm loan associations. We have here, as I 
said before, a mortgage system. If you will study the facts 
carefully you will find that the principles upon which the pro- 
visions of this act are made in relation to the national farm loan 
associations are a combination of mortgage principles and per- 
sonal-credit principles. We have here the principle of amor- 
tized loans. That is derived from the Landschaft. We have 
here the idea of the secretary-treasurer. That is derived from 
the Raiffeisen personal credit societies. We have here the super- 
vision over the loans of the individual farmers. That is Raiff- 
eisen or personal credit; and we have the provision that the 



JAMES B. MORMAN H 

loans shall be expended for productive purposes only, and that 
is Baiffeisen. 

Financing Farm Loan Associations 

This combination of principles raises difficulties. The first 
relates to the difficulty of financing the national farm loan asso- 
ciations. That, in my judgment, is the most important problem 
that we have to deal with in this act. 

How are we going to finance our associations after we have 
them organized? One of the members of the board called me 
into his office the other day and asked me what I was going to 
speak about out here. I said I was going to present the benefits 
of the act, and also show up some cf what I regarded as its 
defects. He asked: 

"Well, what are its defects?" 

"The first defect in my judgment," I said, "is the question 
of financing the farm loan associations." 

"Well, have you worked that out?" he asked. 

"Yes," I answered, "I have worked that out, in my judgment, 
as to what will be the best way of financing these associations. ' ' 

And he said, "Well, I wish you would work out those things 
for me and give them to me tomorrow morning. ' ' 

I did so ; and I will present to you tonight the few notes that 
I made for him relating to this matter. 

Many Farmers Seeking Loans 

Let us assume, if you will, that a national farm loan associa- 
tion has made application for loans to the amount of $50,000. 
That is not at all unlikely, because we have associations already 
formed^ — preliminary associations formed — that have applied for 
loans amounting to over $200,000, and, in fact, let me say right 
now, ladies and gentlemen, that while the federal land banks 
have not yet been established, nor the districts determined, 
there have been more associations formed and more applications 
for loans sent to us at Washington than there is money in sight 
to supply them. So that, if we think that the federal land bank 
system is not yet in operation, we are slightly mistaken. The- 



12 MARKETING AND FARM CREDITS 

machinery has not been completed, but a vast amount of pre- 
liminary work has been done and the farmers will be ready to 
come in and take advantage of this system just as soon as the 
districts have been determined and the land banks have been 
established. 

Now, how shall we finance these associations? The law pro- 
vides four ways. I want to just briefly present them to you. 
First, directors may levy an assessment on members 
in proportion to the amount of stock each holds in the 
association. 

Second, associations may deduct a commission not to 
exceed one-eighth of one per cent semi-annually on the 
unpaid balance of the debt, but said commission has 
to be repaid out of the general funds of the association 
when accumulated. In other words, this is simply an 
advance of money and in fact it may be regarded as a 
loan, in which ease the farm loan association will have 
to pay interest on this advancement. 

Third, associations may borrow money of the land 
banks at an interest rate not to exceed six per cent ; the 
sums so borrowed not to exceed one-fourth of the 
amount of its stock in the land bank. 

Fourth, dividends may be declared by the association 
on stock held in the land bank subject to deductions 
for reserves. 

Note one: An assessment of one-half of one per cent of the 
amount of each borrower's loan would yield a working capital 
of $250 to pay current expenses. That is my proposition with 
reference to the financing of our national farm loan associations, 
that they shall make an assessment upon the members in pro- 
portion to the amount of their loan to the extent of one-half 
of one per cent. That would not burden the farmers, but it 
would give them a working capital. Let us take up the other 
three and see what would happen. 

Note two: Let us assume a payment of $1,000 on the prin- 
cipal of $50,000; then the unpaid balance of the debt would 
■equal $49,000. One-eighth of one per cent equals $69.25. But, 



JAMES B. MORMAN 13 

as I said before, this is only an advance on anticipated dividends 
whicli must be repaid. 

Note three: The payment of interest is a drain on the re- 
sources of an association and not an income. In my judgment 
it would be folly for an association to borrow money in order 
to meet its current expenses. 

Note four: An association with $50,000 of loans would hold 
$2,500 worth of stock in its land bank. On the basis of six per 
cent dividends on the stock, an association would receive $150 
a year as its earnings on stock, but not less than 10 per cent 
must first be set aside for reserve. After that expenses must be- 
paid. If any balance remains dividends may be paid to stock- 
holders, but the payment of dividends is optional and may not 
be expected for the first year at least. 

Status of National Farm Loan Associations 

Now, that is the situation with reference to our national farm 
loan associations, or groups of borrowing farmers, as soon as we 
have them organized. And, gentlemen, if any of you all 
are interested in the organization and development of national 
farm loan associations, I ask you to take this matter into serious 
consideration, because it is the problem of problems with refer- 
ence to farmers. You know and I know that they have nothing 
to fear in paying ordinary interest rates, and in endeavoring 
to reap the benefits of this great act. But we can encumber 
them too much by calling upon them for excessive assessments. 
This is the financial way of meeting this problem. 

But there is another problem. As I said before, the idea with 
reference to the national farm loan associations is that they are 
based upon Rmffeisen principles. Now, the Baiffeisen societies, 
or personal credit societies, are limited to a very narrow terri- 
tory. Many of them are run on a semi-philanthropic basis. 
The officers are men who are interested in rural community life 
and development, and they give their services free of charge. 
We do not have much of that spirit in this country today, and 
consequently we cannot look forward to that as an aid to help 
us. We can suggest that the national farm loan associations limit 
their territory so that the duties of the secretary-treasurer shall 



14 MARKETING AND FARM CREDITS 

not be burdensome and that his salary will not be large. In 
fact, it is going to be recommended by the. board, that, in many 
instances, it will be wise for the farmers to undertake to run 
their own associations without any paid officers and thereby 
save their expense. If they can do that they will be placing 
themselves on a sound and successful basis. 

Is the System Needed? 

Now, is there any need for this system? Are the farmers 
getting loans at rates of interest that they can pay and reap 
remunerative rewards for their labor and capital ? I don 't think 
so. The board on its return from its first trip, which included 
the north section of states and the Central West, issued a circu- 
lar in which it summed up some of the conditions that prevail 
with reference to interest rates and showing the need of the 
Pederal Farm Loan Act. And this is what the board said : 
"The need for the Federal Farm Loan Act was es- 
pecially emphasized by the wide inequalities in interest 
rates disclosed in the hearings. These rates, ranging 
from five per cent per annum to five per cent per month : 
by the fact that even where interest rates of five and 
six per cent were charged, commissions also were ex- 
acted, ranging from a flat rate of one to two per cent to 
a rate of from 1 to 3 per cent per annum on loans. In 
cases where five-year mortgages were made the com- 
missions at 3 per cent per annum amounted to 15 per 
cent of the principal sum borrowed, and this amount 
was deducted when the loan was effected, so that the 
borrower got the use of only 85 per cent of the prin- 
cipal and paid at the rate of 3 per cent per annum on 
the full amount of the loan. In addition to these char- 
ges the borrower has to pay for the abstract of title, 
frequently quite costly, as well as for the preparation 
of legal papers, recording fees, etc." 

The evidence gathered by the board, therefore, shows em- 
phatically the need of the federal farm loan system that will 
give the farmer lower interest rates, better conditions with ref- 



JAMBS B. MORMAN 15 

erence to borrowing, and the advantages of long-time loans re- 
paid on the amortization plan. It has been my fortune or mis- 
fortune to handle the correspondence that has come to our 
bureau, and I wish to say right now that in many instances 
cases which to me were nothing more nor less than downright 
robbery have been brought to the attention of the board. 

These farmers right out of their experience have stated just 
precisely what they have had to pay. And I say that there is 
nothing to me more convincing of the need of the Federal Farm 
Loan Act than this correspondence which has revealed the hearts 
farmers with reference to the loans they have had to pay, the 
commission charges, and the foreclosures that have been made 
on them when they could not meet the debt that was due. 

Now, my time is practically up, and it is suggested that ques- 
tions be asked; but I want to bring to you tonight in conclud- 
ing a message of construction which I think this Conference 
ought to pass with reference to this act. You have on your pro- 
gram these words : ' ' Help work out the next step in rural credit 
legislation. ' ' 

How to Improve System 

I want to bring that home to you and let us help work out the 
next step in rural credit legislation : 

1. Let us in this Conference pass resolutions asking 
that this act in places where it is defective be amended 
so that we can make it stronger for the farmer; that 
he might easier reap its benefits. 

2. Let us request that Congress pass a personal credit 
law. A committee has been appointed in Congress 
to investigate and prepare a bill on personal credits, 
and I wish to say to you tonight, gentlemen, that practi- 
cally nothing has been done along that line and that 
is a very important matter. The farmer of the South 
particularly needs a personal credit system, so that 
he can go and get a loan for six months or nine months, 
as the case may be, giving a note based on chattels as 
security, and thereby reap the benefits of this form of 
credit. 



16 MARKETING AND FARM CREDITS 

3. Let us in this Conference agitate for better and 
"vvider state legislation in behalf of agriculture and the 
farmer. Our states are slow in counteracting the evils 
of mortgage credit and personal credit that exist. Our 
legislators have been blind to the iniquities that have 
been perpetrated in the name of credit and have bur- 
dened farmers so that they are driven from the soil, 
not encouraged to. stay on it, and we Avho are here 
should endeavor to influence legislation in the states 
where we live so that the farmer can have not only a 
better system but be protected in his rights which the 
law should give him. 
And I wish to say in conclusion that, in my judgment, with 
a mortgage system based upon the plan of repayments as here 
outlined, with loans made for productive purposes, and with 
a personal-credit measure passed that will benefit the farmers 
on ^hort-time loans, we shall have a rural credits sj^stem that 
will bring prosperity to our country as never before. 

Discussion 

Chairman McVey: The paper and the subject of farm loan 
credits is open for discussion. Mr. Morman is a representa- 
tive of the Federal Farm Loan Board, working as one of 
its staff. I trust that you will take the opportunity of asking 
him questions or making any comments that you care to upon 
this matter. 

Mr. J. S. Du Charme (Arkansas) : Mr. ]\Iorman, you have 
given us four instances of financing national farm loan associa- 
tions. Will you give us a concrete example of the first? 

Mr. Morman : Of the assessment plan I gave a concrete ex- 
ample, one-half of one per cent. 

Mr. J. S. Du Charme (Arkansas) : You gave four instances. 
The first one? 

Mr. Morman : Yes, sir ; the first one was the assessment 
plan, in which I advocated one-half per cent of the loan, which 
would give them a working capital of $250 on $50,000 of loans. 

Mr. Du Charme : That would be for the local ? 



JAMBS B. MOBMAN 17 

Mr. Morman: That would be for the local association, yes; 
the national farm loan association, the local farmers' group. 

Mr. Du Charme : They would assess one per cent of the cap- 
ital stock that they subscribed themselves? 

Mr. Morman: One per cent would give them double that 
amount or $500; one-half of one per cent, or $250. 

Mr.^Du Charme: One-half of one per cent? 

Mr. Morman: Yes; we should be very careful not to go too 
high with reference to the assessment, so as not to burden the 
farmer any too much. If we can induce the farmers to under- 
take the duties of secretary-treasurer, and some other little 
duties like that, why it would not be a very difficult matter for 
them to run their own associations with very little expense. 

Mr. T. N. Carver (]Massachusetts) : I understood from Mr. 
jMorman, when he began discussing the question of mortgage 
credit and personal credit, that he thought it was a weakness 
of the bill, and yet when he finished I was not quite certain. 
Do you regard that as a bad feature, and if so, why? 

Mr. Morman : I don 't think after all it is a bad feature, this 
combination of long-time and short-time principles. We are 
dealing with something untried in the United States, and in 
many parts of our country we are dealing with farmers who 
need a little advice and supervision. It is more in the nature 
of advice, supervision and care that his loan shall be put to 
productive purposes, so that he will reap not only the benefits 
of the loan, but help to reap it by having this supervision. Now, 
there is the joint stock land bank which avoids that criticism, 
because the farmer can come to the joint stock land bank and 
borrow and no question is asked as to what he is going to do 
with his loan; so, if he wants it for a washing machine or an 
automobile he can do so, but he could not do so as a member of 
a national farm loan association. And that differs from the 
federal land bank, the loan from which must be used for pro- 
ductive purposes. So that we have tAvo plans therefor : we have 
the man protected whom we think needs to be protected from 
foolish expenditures, and we have the man who is wise enough 
to spend his money rightly when he borrows it. 

J\Ir. P. V. Collins (District of Columbia) : I would like Mr. 
Morman to make it a little clearer to us about the agents of 



18 MARKETING AND FARM CREDITS 

the federal land banks. As I understand it, the law does not 
provide that a bank may become an agent of a federal land 
bank until after a certain period has elapsed for the organiza- 
tion of a local cooperative loan ass:ociation. If such an asso- 
ciation is formed there cannot be an agent. I submit that 
wherever there is no association formed there may not be an 
agent in the form of a national bank for the reason that a na- 
tional bank can lend its own money to verj^ much better ad- 
vantage ; and where it monopolizes the field, where it has driven 
cooperation out of the field, it will occupy the field as it already 
does. Cooperation has been made absolutely impossible by the 
provisions of this law. It has been made impossible further by 
the authorization of joint stock banks, and yet I want Mr. Mor- 
man to explain by what authority in the law the Federal Farm 
Loan Board undertakes to suspend the operation of that pro- 
vision of the law, undertakes to suspend the charter of a joint 
stock land bank where the bank is fostered by capitalists with- 
out the objectionable features of artificial promotion, etc. Has 
the law given to the Farm Loan Board the authority to refuse 
charters under such circumstances? And do not forget the 
agent question, too. 

Mr. Morman: Yes; you have two questions there, Mr. Col- 
lins. In the first place no national bank can be made an agent. 
In the second place no national bank can make farm mortgage 
loans, anyhow; it is the state bank or state-chartered institu- 
tion. 

Mr. Collins: I have said state bank. 

The Chairman: Are not banks that are known as country 
banks allowed to loan one-fifth of their capital on farm mort- 
gages at the present time? 

Mr. Morman: State banks? 

The Chairman : No, national banks. 

Mr. Morman : Yes ; national banks, I believe they are. Un- 
der the Federal Reserve Act they can lend up to 25 per cent of 
their capital and surplus. 

Mr. Cole : Ten per cent. 

Mr. Morman : Now. with reference to the authority of the 
Federal Farm Loan Board in refusing to charter the joint 
stock land banks, I do not believe there is any authority; I do 



JAMES B. MORMAN 19 

not know of any. The board has done it for a purpose, and 
the purpose is that it wants to give the farmers the benefit of 
this system and not allow the benefits to be reaped by private 
capital. That, I believe, is fundamentally their object. 

Mr. Collins: The board is doing some legislating on its own 
account, then? 

Mr. Morman: Practically so. 

Mr. Wm. StuU (Nebraska) : You stated that, in those locali- 
ties where the borrower pays the rate of five per cent interest, 
the commission paid was from three to fifteen per cent. 

Mr. Morman : One to three, and on a five-year loan it w^ould 
be equivalent to fifteen per cent. 

Mr. Stull: Where? 

Mr." Norman : I do not know where. 

Mr. Stull: I don't either. 

Mr. Morman : I don 't know where ; I am simply quoting the 
statement that the board made. They do not state any locality. 

Mr. J. H. Welch (New Mexico) : If you please, I can tell 
him where. Go into the great Southwest. I am from New 
Mexico. I have reference to the commission of three or fifteen 
per cent. There is no five per cent money there. 

Mr. Stull: I say, where the bank rate is five. 

Mr. Morman : Oh, the bank rate of five per cent is in New 
Hampshire. New Hampshire has the lowest rate of any state 
in the United States, and it is practically equivalent to five per 
cent on account of the law there which exempts the mortgages 
from taxation when they are issued at five per cent or lower. 

Mr. Stull: Don't you know there is more money loaned 
every year in Iowa at five per cent than is loaned in Vermont 
in ten years? 

Mr. Morman : It may be so in certain sections, but you take 
Iowa as a whole, and its rate is six per cent. 

Mr. Stull : I beg your pardon ; there is not a company that 
can get as many five per cent loans as they can make, and the 
farmers in many cases are not paying one-half of one per cent 
flat. 

Mr. Morman : All I have to go by are the statistics gathered 
by the rural organization service of the United States Depart- 
ment of Agriculture wdiich has given established data with ref- 



20 MARKETING AND FARM CREDITS 

erenee to mortgage loans. Those data were presented before the 
congressional committee having to deal with this act; that com- 
mittee accepted them as reliable data, and I do the same. There 
may be individual cases where loans are made at five per cent. 
But let us not forget this, that under this system the benefits 
are not confined to interest rates alone. If you out there in 
Iowa are making a straight loan at five per cent, do not forget 
this, that this law gives you these additional advantages: That 
you can take your loan for from five to forty years at your own 
option; pay it off by amortization payments so that you hardly 
know the difference from straight interest ; you have no com- 
mission charges to pay, and you are never under the fear of 
foreclosure. These are the advantages of this system that you 
do not get under the ordinary straight mortgage system. 

Mr. Stull: For more than 20 years practically every mort- 
gage made in Iowa, Nebraska or Illinois has the option, the bor- 
rower retains the option, to pay $100 or any multiple thereof 
when any interest is due. If he has a hard year he is not com- 
pelled to pay any. 

Mr. Morman : Yes, I will concede that there are certain 
benefits derived in Iowa and Ohio under farm mortgage loans 
not derived in any other state; but this is legislation that ap- 
peals to the whole United States, and, as this gentleman said 
down here, in the South and Southwest they are sometimes pay- 
ing as high as 40 per cent, and no farmer can do that and live. 

Mr. Stull: Where the loaning people, like the large life in- 
surance companies and the large savings banks of New Eng- 
land, are making a five per cent rate, do you assume that that 
rate added on wdth the commissions is six per cent? 

Mr. Morman: I assume nothing; j^ou must fight that out 
with the Federal Farm Loan Board as to the fact with refer- 
ence to loans made by insurance companies which do charge 
commissions, especially when those loans are made tlirough 
agents, and most of them are made that way, and the agent 
gets his commission. 

Mr. Stull : Very seldom. 

Mr. Charles Adkins (Illinois) : Let me ask you a question: 
What we want to know^ is the practical workings of this propo- 
sition. It is not as to whether it is a good proposition or a bad 



JAMES B. MORMAN 21 

one, but how are we going to applj^- it? Now, here is a con- 
crete proposition. A man came to me the other day — he lives 
down in Central Illinois where land is worth $250 an acre ; he 
is buying a $40,000 farm and is borrowing $20,000 of the 
money. He was talking to me as to the advisability of organiz- 
ing just such an association as you are talking about and we 
talked the matter over and decided that in the beginning— 
now, here, see if we are right or not; see whether we know 
how to apply this or not, — we considered the advisability of 
organizing such an association, whether it would be to his ad- 
vantage or not. Now, our understanding of it is that he could 
only borrow $10,000, is that true? 

Mr, Morman: That is correct. 

Mr. Adkins: And that is a first mortgage on this $40,000 
farm of which he would owe $20,000. 

Mr. Morman : Yes, sir. 

Mr. Adkins: That money can run 40 years; can it not? 

Mr. Morman: Yes, sir. 

Mr. Adkins: Then he would have to come in with a second 
mortgage from some other source, a second mortgage to a 40 
year first mortgage ; that was my understanding. 

Mr. Morman: Yes. 

Mr. Adkins : He can borrow that money at five per cent with- 
out any commission. We sat down and figured on it, and I told 
him that my^ understanding was that in the organization of a 
society of this kind that you speak of here that probably in the 
beginning his interest would cost him six per cent counting all 
the expenses? Is that true? 

Mr. Morman : No, I hardly think so. 

Mr. Adkins : Well, what would it be, because that is what 
we want to find out? 

Mr. Morman: Well, we don't know, because the system is 
not operative yet. 

]Mr. Adkins: Well, I got my notion from the board when 
Mr. McAdoo and the board were at Springfield. I was before 
that hearing. 

Mr. IMorman : Yes. 

Mr. Adkins: Now, the idea is, gentlemen, as I understand 
it, to find out how we are going to apply this law justly to the 



22 MARKETING AND FARM CREDITS • 

farmers. This is a case where a man is buying a $40,000 farm, 
and wants to borrow $20,000. 

Mr. Morman: May I ask one question: Is he going to pay 
any money down on his purchase? 

Mr. Adkins: $20,000. 

Mr. Morman: Going to pay down $20,000? 

Mr. Adkins: And a $20,000 mortgage. 

Mr. Morman: And a $20,000 mortgage? 

Mr. Adkins: Yes. 

Mr. Morman: You realize that he could not on account of 
the limitations borrow through a national farm loan association. 
But he could go to a joint stock land bank in his state and bor- 
row the $20,000, or $25,000 in accordance with the 50 per cent 
appraisement of the value of his land, and then he could give 
his first mortgage to the joint stock land bank and would have 
to carry no second mortgage at all. 

Mr. Collins: How can he when they forbid the establish- 
ment of the joint stock land banks? 

Mr. Morman: That is only temporary. 

Mr. H. N. Eliot: Can that farm be divided into halves, and 
half of the mortgage taken out under that system and half un- 
der the system that exists now? 

Mr. Adkins : Excuse me ; the question I wanted to know is 
whether there is any financial advantage to the man if that is 
done? Now, there is no trouble about getting all the money 
that you want at as long a time as you want at five per cent. 
That is well understood. But the question is now, is it a finan- 
cial advantage to him? That is what every man is looking at. 

Mr. Morman : AVell, if he could under the present mortgage 
system get the loan as cheaply withont commission charges on 
long time, as long as he chooses up to 40 years, on the amorti- 
zation plan of repayment, and with no fear of foreclosure, — if 
he can borrow under all those conditions under the present mort- 
gage system there would be no financial or any other advantage 
to him ; but I do not know of any mortgage system operating in 
this country that will give any borrower on first mortgages all 
these advantages, and if there is I would like to know about it. 

Mr. S. D. Cromer (Missouri) : It seems to me from surveys 
made in the Corn belt that there are many farms that the farmer 



JAMES B. MORMAN 23 

and public opinion would value at $15,000, I understand the ■ 
law provides that in valuing this farm the income of the farm 
should be taken into consideration, Manj^ of these farms prob- 
ably would not yield more than four per cent. Well, now, four 
per cent on $15,000 is $600, and then if this loan should be at 
six per cent, $600 divided by six-hundredths will give you a 
$10,000 farm. Now, suppose this farm had $3,000 worth of im- 
provements on it, and then you cut down that $3,000 of im- 
provements in the same way, you have got $2,000. Then you 
can borrow 20 per cent on the $2,000, Avhich would be $400, and 
then the farmer has got to buy 5 per cent of stock, so he can 
only take out 471/2 per cent net. So you take 47 1/^ per cent net, 
and you have got $3,800, and 171/2 per cent on your $2,000 is 
$350, which gives you $4,150 that you can borrow on a $15,000 
farm. Then you would be very likely subject to an assessment, 
as you explained awhile ago. Now, while we all admit that a 
farm mortgage is more or less not liquid, while it is the best 
security in the world, at the same time the Federal Farm Loan 
Board rightly builds up a big reserve fund in the form of capi- 
tal, etc., which I think is right. But now^ on a $15,000 farm, as 
many a farm goes, in the Corn belt, you can only borrow $4,150 
net. Is not this law, under these conditions, rather conserva- 
tive, and will not that ver}^ likely throw a great deal of the busi- 
ness into the hands of the insurance companies and other priv- 
ate leaders'? 

Mr. Morman : I don 't accept your hypothesis at all. In the 
first place the language of the law is this : That the earning 
power of the land shall be the principal factor in determining- 
appraisement. 

Mr. Gromer: That is what I was saying. 

Mr. Morman: Now, your OAvn local loan committee of three 
members of your own farm loan association are going to make 
your primary appraisement. Then comes along the federal 
land bank appraiser, who is a man familiar with the land val- 
ues and the farm values of your own state, or he will not get 
the appointment, and he in connection Avith the loan committee 
forms an appraisement there that may be even higher than your 
appraisement, for all we know, 

]Mr. Gromer : Yes, it mav be : but if he follows out the strict 



24 MARKETING AND FARM CREDITS 

letter of the law it will certainly be more or less as I have 
stated. 

Mr, Morman : Then, if he follows the strict letter of the 
law I shall assume that the farmer will be just as much bene- 
fited as injured in the appraisement of his land and especially 
as his own committee of three farmers, his own members, Ms 
own neighbors know the value of this land better than anybody 
else and I do not believe they are going to undervalue it. 

Mr. Charles McCarthy (Wisconsin) : Now, as to the ap- 
praisal: If the appraisal is the same throughout the country, 
by federal appraisal, Avill not the offerings of the first bonds be 
the same throughout the country? 

Mr. Morman : But why should we assume that the appraisals 
will be all the same? Each individual farm is appraised on its 
own basis. Farms vary; $200 an acre in Iowa, $25 an acre 
down south — they are appraised according to the earning power 
of the land in that locality. 

Mr. McCarthy : But, if the earning power of the land is ap- 
praised it does not make any difference whether it is $200 an 
acre or $100 an acre in putting the values on it for the bonding. 

Mr. Morman: Not at all. 

Mr. McCarthy: So that the bonding will be even through 
the entire country. 

Mr. Morman: That is the object, to have the bonds practi- 
cally uniform throughout the entire country and that the rates 
which bonds will bear will be practically uniform all over the 
United States, 

Mr. McCarthy: Then I understand the policy of the board 
is to have a uniform rate throughout the country. 

Mr. Morman: Absolutely. 

Mr. McCarthy: Has the board determined what they will 
offer the first bonds for? 

Mr. Morman: Practically, yes. You will find that the law 
provides, of course, that the ultimate mortgage rates will be 
determined by the bond rate because the law allows the banks 
to charge a margin of one per cent on the mortgages to give 
them a profit for running the banks. Now, they expect that 
the federal land bank bonds will sell at practically four per 
cent, so that the farmers are expected to get mortgage loans at 



JAMBS B. MORMAN 25 

five per cent, and tlie}^ are going to fix that on the prospective 
sale of the bonds afterwards. 

Mr. McCarthy: And you expect that the prospective sale 
will give five per cent mortgage? 

Mr. Morman : Five per cent mortgage and four per cent 
"bonds. 

Mr. McCarthy: Five per cent mortgage and four per cent 
iDonds throughout the country? 

Mr. Morman: Yes, sir; that is what is expected. 

Mr. Lambert : Mr. Chairman, I attended a hearing of the 
Federal Farm Loan Board at IMadison a couple of months ago, 
and one thing that pleased me greatly was a statement of Com- 
missioner Norris. There were not very many farmers there ; 
they were mostly bankers and business men in Madison. And 
one of the things that Commissioner Norris said was: "Gentle- 
men, you understand that nowadays everybody agrees that 
farmers must do their business cooperatively, both in the mar- 
keting and in the procuring of their requirements." And the 
thing that he wanted to point out, and did point out, was that 
this cooperative plan through the farm loan association would 
start the cooperative movement throughout the country together. 
In other words, our government today puts the stamp of ap- 
proval on the cooperative way of doing business. Now, I would 
like to ask you, Mr. Morman, whether you think that will have 
.a beneficial effect? 

Mr. Morman: Cooperative? 

Mr. Lambert : Yes. That is, using this as a model as setting 
the stamp of approval on the cooperative movement in this 
■country, I M^ould like to get your views as to whether that 
amounts to anything or not. 

Mr. Morman: Well, I will tell you how I will answer that, 
When this bill was introduced into the LTnited States Senate 
on January 5th last. Senator Hollis, who had charge of the bill 
in the senate, sent it to me for my criticisms, and I wrote him 
back that in my judgment it lacked one thing, and that was life. 
And he wanted to know how we could put that in ; and I said, 
^'Put it in by having propoganda work so as to teach the farmers 
the benefits of the act." And you will find that this la.st long 
paragraph of Section 3 was inserted at the suggestion of your 



26 MARKETING AND FARM CREDITS' 

humble servant after the bill had been introduced into the 
United States Senate. In tliat section you will find this, that 
one of the duties of the board shall be "to disseminate in its 
discretion information for the further instruction of farmers 
regarding the methods and j^rinciples of cooperative credit and 
organization." And that is my answer. 

Mr. J. N. McBride (Michigan) : . This question of the 10 
men to form the local organization ; suppose that the board finds 
three whose titles are invalid or technical irregularities in their 
abstracts; where does it leave the other seven? 

Mr. Morman: The other seven would be looking for three 
other men to come in with them. 

Mr. McBride : Another question : When states have differ- 
ent plans for taxing mortgages, what is going to be the effect 
in a state where the cash values of a mortgage are taxed and 
those that go to the loan association will be taxed, and in states 
where they are not taxed, simply registered, each state will fol- 
low the particular lines? 

Mr. Morman : The law provides that the farm loan commis- 
sioner shall have all the state laws examined and see if they can 
be made to conform to the provisions of this act, and, if not, that 
no mortgages need be taken from that state until the state legis- 
lature changes its laws so as to conform to this act. 

Mr. Adkins : One more question, please : You know that 
where the shoe always pinches on farm loans, is when a man 
defaults on his interest and payments, and they come in to close 
him out. They did that in the early days of Illinois, but now 
they cannot close a man out, because he can always sell out and 
get out with his hide whole. Now, you said awhile ago that the 
beauty of this proposition was that they could not come in and 
foreclose and take a man's farm away from him. Now, when a 
man defaults in his payments and is unable to meet his pay- 
ments, what happens? 

Mr. Morman -. The law provides that the association of which 
he is a member shall carry him for a period of two years and 
deduct the money out of the sinking fund ; that is provided for. 

Mr. Adkins: You don't quite get my question. You know 
there are some men who are naturally not thrifty. 

Mr. Morman: Yes, sir; I recognize that. 



JAMES B. MORMAN 27 

Mr. Adkins: And they get hold of money some way or an- 
other and will buy a farm, and for some reason or other their 
expenses will exceed their income. The proposition is, with that 
kind of a man what happens in the end ? 

Mr. Morman: I don't think such a kind of man would be 
admitted to membership in the farm loan association, in the 
first place, because he must be elected by two-thirds vote of the 
directors and they know their members; and if they take in a 
man who naturally they know is a menace to the society they 
are about as foolish as he is, and I do not think they will do it. 

Mr. Adkins: But lots of men do. The question is, what 
happens when a man fails to do it in the end ? 

Mr. Morman: "When I spoke about the fear of foreclosure 
I was dealing with the fact in a general sense. The bank that 
advances the loan has the right after two years to foreclose if 
the man persists in defaulting, but for two years it c:innot fore- 
close on him. It is not so much a question of thriftlessness as 
it is a question of the misfortune that might befall him because 
of disease affecting liis crops, or disease affecting his cattle, or 
flood wiping him out, or something of that kind. That is a mis- 
fortune, and then the law provides that the association shall 
carry him so as to protect him against misfortune and not to 
foreclose on him before that time. 

Mr, "Welch : Please give us the manner of procedure of or- 
ganization of a farm loan association. 

Mr. Morman : Let us see if we can outline the simple pro- 
cedure that takes place. Ten farmers get together. They may 
get together in a home or a school-house, and they say, ""We 
will form this association." They write to the Federal Farm 
Loan Board and get articles of association free of charge; they 
sign these articles of association and then they want to apply for 
loans. They write for application blanks, and they get them 
free of charge and they apply for loans. They turn those appli- 
cations over to the secretary-treasurer of their association and 
he sends the applications for the loans to the federal land 
bank. After the loan committee of the association has appraised 
the land, and sent their report, the federal land bank sends its 
appraiser to appraise the lands. If the lands are regarded as 
good security for the loan and the appraiser makes a report to 



28 MARKETING AND FARM CREDITS 

that effect to the land bank, the secretary-treasurer is sent a 
check for the amount, and he disburses to the members accord- 
ing to their applications for loans. 

Mr. Welch: The question is the procedure in the local or- 
ganization. How many officers do you want? 

The Chairman: May I say in reply to that, you will notice 
on the program we have here a paper by 5Ir. Camp, who dis- 
cusses Experiences in Organizing National Credit Association 
in North Carolina. 

Mr. Bartlett : Who pays the expenses of the appraiser ? 

Mr. Morman: The federal land bank. 

Mr. Bartlett: Both of them, the local and the land bank? 

Mr. Morman : That is an interesting question. I am glad 
you asked it. AVe sometimes think that farmers are foolish, but 
they can give some of us pointers sometimes. I have a copy of 
a letter here that I received the other day asking that very ques- 
tion with reference to the appraisal committee. The writer 
says: 

''It is my opinion that the board Avill be called upon by other 
associations to make a ruling on the question of paying the loan 
committee a fee for appraising the land of prospective bor- 
rowers. Now as a rule the law expects that the loan committee 
is going to work without charging, on the old Raiffeisen princi- 
ple. We now have a membership of 21 with a prospect of 50 
by the time the bank is organized. It is too much to ask any 
three men to spend a month appraising farms without remun- 
eration. ' ' 

I think that was a good, sensible letter. Now, with reference 
to the other question as to who pays the land bank appraiser. 
The land bank appraiser is paid by the federal land banks and 
joint stock land banks which they serve in such proportion and 
in such manner as the Federal Farm Loan Board shall order. 

Mr. H. J. Hughes (Minnesota) : Suppose after this has been 
allowed, and the secretary-treasurer has received the cheek and 
distributes to the borrowers, to whom are the interests and the 
amortization payments paid? Are they paid to this secretary- 
treasurer or made direct to the bank, and how much duty and 
how much trouble will the secretary-treasurer have after the 
loans have been made? 



JAMES B. MORMAN 29 

Mr. Morman : All payments are made to the secretary-treas- 
urer. He is the acting officer of the association and practically 
takes the burden of the work off of all the farmers. He is ex- 
pected to collect the interest and instalments and transmit them 
forthwith to the federal land bank of his district. It is not ex- 
pected that the farmers are going to default to any great extent. 
They might, but I don 't think many of them are going to do that. 
I do not think we need to worry ourselves about farmers having 
a 50 per cent appraisement on their land that they are going to 
deliberately default their interest and instalment payments. 
But to answer your question, the secretary-treasurer does all 
that work. That is part of liis duties, and, consequently, that 
is the reason for having a good man. It isn't to be expected as 
a rule that a man will do all that work for nothing. But if a 
man is influenced by the spirit of community service, if one of 
the farmers, an intelligent man, will do that, it will help to keep 
down expenses. That is why I urge upon national farm loan 
associations not to have any heavy expenses. 

Mr. Hughes : Under your first question there of assessing 
one-half of one per cent; do you mean that each year? 

Mr. Morman: No, it would not be very long, because they 
anticipate dividends from the stock that they as borrowers pur- 
chased through their association of the federal land bank. In 
all probability the federal land banks wall be established by the 
United States government wdth a capital of $750,000, making a 
total of nine millions of stock held by the United States govern- 
ment w^hich will draw no dividends. They all go to the farmers 
who are members of the associations. The latter, having sub- 
scribed for stock, get all the benefits of the government subsidy 
of $750,000 in each bank. 

Mr. Glidden : You said that the applications for loans already 
exceed the money available. Now^, when wdll there be more 
money available? 

Mr. Morman : Just as soon as the bonds are sold. You know 
the law provides for the issuing of bonds on farm mortgages in 
series of not less than $50,000. As soon as the federal land 
bank has $50,000 in mortgages, those mortgages are put up as 
collateral security with an official knowm as the registrar, one 
being appointed for each district. The registrar reports to 



30 MARKETING AND FARM CREDITS 

the secretary of the treasury that he has $50,000 worth of 
mortgages there, and he wants $50,000 worth of bonds to be is- 
sued on those mortgages. Those bonds are issued in denomina- 
tions of $25, $50, $100, $500, and $1,000 to meet every class of 
investor, and those bonds are marketed to the public or mar- 
keted to anyone who wants them. But the banks in Dallas, 
Texas, have already offered to take the first $2,000,000 worth 
of bonds that will be issued in the district that will include the 
state of Texas. In all probability the bonds, on account of care- 
ful government supervision over the system, will be regarded 
as a high-class security, and may sell even at less than four per 
cent when they once get on the market. So I do not think there 
will be any doubt of our getting all the money we need to finance 
the farmers when we get the bonds issued through the federal 
government. 

Mr. H. J. Farmer (Minnesota) : The question is not to cor- 
ner you, but for information. We are not all held collectively? 

Mr. Morman: No; you are not held responsible for any 
man's debts. You are held responsible in the case of the failure 
of the association for the amount of your stock held in the as- 
sociation and are liable for an equal amount. 

Mr. Welch: Mr. Chairman, I would like to have Mr. Mor- 
man now answer my original question. 

The Chairman : We will ask Mr. Morman to answer Mr. 
Welch. 

Mr. Morman : Now, what was the question ? 

Mr. Welch : The question was as to the manner of procedure 
of the local organization of the farmers' loan association. 

Mr. Morman : I partly answered it and then went on to an- 
other subject. Ten farmers get together and they decide that 
they will form an organization and sign the articles of associa- 
tion. Then they elect directors. The law says it shall not be 
less than five. The board is now advocating that they elect nine, 
for this reason, that members must be elected by two-thirds vote 
of the directors. Only by those votes can they be made mem- 
bers. Now, two-thirds of five votes would be more than three 
and less than four votes, so the board decided that it would be 
better for the association to elect nine directors. Having elected 
nine directors they then proceed to elect a president, vice-presi- 



JAMES B. MORMAN 31 

dent, a loan committee of three members and a secretary-treas- 
urer. Those are the officers of the association and the only of- 
ficers. 

Now, here comes in two interesting questions with reference 
to additional business. The members of an association must all 
be borrowers except the secretary-treasurer. He is the only one 
that need not be a member of the association, nor even a resident 
of the district. Now, if any one of the directors wants to get a 
loan, a substitute must be elected to take his place. No man 
can pass upon a loan who is directly interested. The same ap- 
plies to the loan committee; if anyone of those wishes to get a 
loan a substitute must be appointed to take his place. "Where 
there is a large membership in an association, the appointment 
of two sets of committees is being advocated, so that they can 
always have a man ready to take the place of the man who is 
applying for a loan. 

Now, they make their applications for loans on blanks fur- 
nished by the Farm Loan Board. In that connection let me say 
that every paper needed by a farm loan association will be pro- 
vided free of charge by the federal land bank of the district. 
The board will furnish them to the federal land bank of the dis- 
trict, and the federal land bank will furnish them to the asso- 
ciation free of charge. That is done because all the papers must 
be transmitted to the federal land bank of the district and not 
to the board. The associations deal with the district bank, and 
the district bank, when it has got all these papers together, sends 
them on to the Federal Farm Loan Board in order to see whether 
the board will grant the association a charter. 

Let me go back one other step. After the loan committee have 
made their appraisal of the farm lands they make out a report 
which must be unanimous. That report is submitted to the 
secretary-treasurer and he has it sworn to before a court officer, 
or before some other officer competent to administer the oath. 
Then those papers, including the applications for loans, articles 
of association, and the application for a charter, are sent to the 
federal land bank, and the federal land bank passes upon them 
and sends them to the Federal Farm Loan Board. If every- 
thing is satisfactory, the board grants the national farm loan as- 
sociation a charter and it is ready to go and do business as a 



32 MARKETING AND FARM CREDITS 

corporate body. That is the reason why the members have to 
purchase stock in the association so as to conform to the law in 
being stockholders. It is a stock concern. 

Now, here is another interesting thing. The five per cent 
that the farmer has to put up, he first puts up in the national 
farm loan association. That five per cent is stock that he holds 
in the association. But the association as a unit, as a corporate 
body, holds the stock as part security for his loan. That same 
five per cent is transmitted by the association as a unit, as a cor- 
porate body, to the federal land bank of the district, and the 
federal land bank of the district grants the association five per 
cent of stock of the federal land bank. But that stock is held 
by the federal land bank as part security for the loans that the 
association has to endorse for the members, so that the divi- 
dends, if any, go to the association and not to the members. The 
dividends are distributed to pay the expenses of the association. 
Then, Avhatever is left, is turned over to the farmers as stock- 
holders in the association. 

Mr. Smith : "What process does the farmer go through to pay 
this five per cent of his loan 1 

Mr. Morman : He can advance it out of his own pocket. But 
if he has not the money he can borrow it of the federal land 
bank, make it part of his loan, and pay it off on the amortiza- 
tion plan of payment just the same as his original loan. In other 
words, if the farmer has no money to put up, the federal land 
bank will lend him the money. 

The Chairman : Mr. IMorman, if he already has 50 per cent 
of his loan he cannot raise that to 55 per cent. 

Mr. Morman : No, it must come within the 50 per cent ap- 
praisal value ; it must come within that. 

]\Ir. Bowen: This committee of three must vote unanimously 
for the loan. What if a certain member of this committee had 
a personal grudge against a man who desired a loan, and he 
would not vote to approve the loan ? You know, farmers do not 
sometimes get along. How would you get around that ? 

Mr. Morman : You could not get around that unless it was 
reported and a substitute member of that committee was put on 
to reappraise the land. If it was know^n that it was done by 
personal grudge they could easily overcome that. 



JAMES B. I\IORMAN 33 

Mr. Bowen: It would be hard, it seems to me, to find out. 
It might even have been years before that he had bought a mule 
with the heaves from this fellow, or something like that. 

Mr. Morman: Yes; but there would be no objection to hav- 
ing another committee appointed. Your association is your own 
autonomous body; you govern j^ourselves, and if you think you 
have not had justice, require another committee and let them 
go ahead. 

Mr. Bowen : Just protest. 

Mr. Morman : Protest, anyway. 

Mr. Stevens (Michigan) : After the farmer has repaid his 
loan and liquidated the debt, how will the stock that he has sub- 
scribed for be repaid? 

Mr. Morman : He can take the money that is due him on his 
stock and pay off his last payment, or he can get that in cash. 
It is refunded to him by the federal land bank of the district; 
he is entitled to that, and during all the time that his loan is 
being carried he is entitled to dividends on his stock from the 
federal land bank. Then, as soon as his loan is repaid, it au- 
tomatically removes him from being a member of the assoeia- 
tion because all members must be borrowers, and as he is no 
longer a borrower, he is therefore out of the association. 

J\Ir. Stevens : I think you said that state laws might in some 
instances aid the federal act. Has the board formulated any 
specific recommendations for submission to the legislature so 
that the laws might conform to the federal act? 

]Mr. Morman : The governor of every state has been com- 
municated with, and many of the legislatures will take up that 
question and consider it this 3'ear, because they are all anxious 
to have their farmers reap the benefits of this act. One. of the 
greatest difficulties, I think, may arise in Texas on account of 
the Texas homestead law which forbids a man to mortgage his 
homestead with less than 200 acres, except for vendor's lien. 
That is going to create a more difficult problem, I think, than 
under irrigation projects. I think Texas will give about as 
much trouble as anything unless we can see our way clear to 
give them the benefits of that particular clause, which says that 
a man can mortgage his homestead for a vendor's lien. I re- 
ceived a letter last week from the Speaker of the Texas legisla- 



34: MARKETING AND FARM CREDITS. 

ture, in which he says that most of the indebtedness on Texas 
homesteads is due to the fact of vendor's lien.* 

Mr. StuU (Nebraska) : I understand it takes 10 men to or- 
ganize one of these loan companies. Now, suppose you have an 
organization and after five years I understand a debt can be 
paid off for any amount; is that right! 

Mr. jVEorman: After five years the borrower can pay off his 
loan in $25 payments, or any multiple of $25. 

Mr. Stull: Supposing there are ten of them, and suppose 
five of them are lucky enough to pay off their loan, what be- 
comes of the other five? 

Mr. Morman: They still retain their membership, and they 
can always take in members. Any man can come in afterwards 
if he only wants a loan of $100 ; he can be voted in and get his 
loan of $100, or as high as $10,000, so that the association is 
expected to grow. But if those five men should pay off their 
loans, the other five can go right on. 

Mr. Carleton : You say that you can borrow 50 per cent of 
the value of your property. Would it not really be more ac- 
curate and more comparable with the present system to say 
that you can borrow in cash 47^2 per cent in money, and get 
the other 2i/2 per cent, or 5 per cent off 50 per cent in stock and 
shares? In other words, you are not getting the full 50 per 
cent cash, and how does that differ in principle from the bonus 
system of the present private mortgage arrangement? 

Mr. Morman : It differs in this respect, that many a man 
will have cash enough to put up for his stock, and then he can 
get the full value of his loan. Then again, supposing that he 
has not got enough and he takes it out of his loan, then it would 
be the 47^/^ per cent as you say. But I do not see why it would 
be a bonus, because it is an investment, though it is counted 
in as part of the loan and you have to pay interest on it. 

Mr. Carleton: I understand there is no certainty that you 
are going to get any dividends on these shares. In that case it 
is a pure bonus. 

Mr. W. R. Camp (North Carolina) : The money is paid back 
at the end of the time. 



* That is the only indebtedness allowed by law, except a mechanic's 
lien. — -Ed. 



JAMES B. MORMAN 35 

Mr. Carleton: Well, it is after you have got •171/2 in ^'-asii of 
the value of your farm and then you are paid back 50 per cent, 
paid back 50 per cent instead of ITi/o per cent. 

Mr. Morman: No, you are only paying 47iA per cent; that 
is all you are paying interest on. No ; that is so — I see. That 
is right ; you are paying interest — hold on, now, let 's get Mr. 
Carleton 's question right. 

]\Ir. Carleton : Suppose you have a farm worth $20,000, and 
you borrow $10,000 on it, you do not get your $10,000, or if 
you do you pay five per cent of $10,000 back again, so that vir- 
tually you only get $10,000, minus five per cent; the rest you 
get in shares of stock. 

The Chairman: That makes the rate 5i.4- 

Mr. Carleton : Yes. "Well, in other words, you are paying 
a little more than five per cent. You have given virtually a 
bonus except that you may get dividends on these shares, in 
which case it is not quite like a bonus. 

Mr. Morman : Yes, if you get the dividends, and it is antici- 
pated they will get the dividends; then, of course, it will kind 
of even things up. But, as you say, at first there would be a 
little discrepancy. But it was done in order to bring in the 
man who did not have the cash to put up, and there are lots of 
farmers in that condition. Of course, these little difficulties 
will arise and you cannot make it perfect even if he has the 
cash to put up. I do not see that it makes any difference in 
principle. He could have the cash to put up and pay the bonus 
to a private broker and get the full 50 per cent value of the land, 
except that he is taking the risk of all investors that you may 
or may not get dividends. 

Mr. Camp : Besides, if he gives it to the real estate man he 
never gets it back again. 

Mr. i\Iorman: No, I guess not. 

Mr. Du Charme : I thought I was right on that, and it raises 
a question in my mind. The gentleman asks what is the differ- 
ence between that and the nature of a bonus? Will this answer 
the question : The fact that he gets dividends on that stock and 
then the next thing, when he ceases to be a member, when his 
stock is paid, what becomes of that stock? 

Mr. Morman: That stock is cancelled. 



36 MARKETING AND FARM CREDITS 

Mr. Du Charme : Then he gets his .money back. 

Mr. Morman : Then he gets his money back, or he can take 
a less amount and pay it on the balance of his loan. 

Mr. Du Charme: Then he is not paying but 471/2 per cent. 

Mr. Morman: Well, he is paying interest on it. 

Mr. Du Charme : Yes, he is paying interest ; but if the divi- 
dendsT— 

Mr. Morman: Yes, if the dividends come in it will put the 
balance up, but on the first you Avill have to admit that he is 
paying interest. 

Mr. Bartlett : Just a word relative to the gentleman from 
Illinois who cited the case of where 10 farmers borrowed. 
Bonds were issued and sold. Five of the farmers then came in 
and paid off their mortgages. "What becomes of the bonds that 
are outstanding against those five mortgages? 

Mr. Morman : The loan association does not issue bonds ; the 
federal land bank issues bonds. 

Mr. Bartlett : That is, what they are based on is those 10 
mortgages ? 

Mr. Morman: Yes. 

Mr. Bartlett: Now, if half of those mortgages are paid — 

Mr. Morman : Those bonds are cancelled. 

Mr. Bartlett : I know, but suppose I own the 10 bonds ; how 
am I going to be called on for them? 

Mr. Morman : The law provides that they shall be called in — 
they are issued by series and the bank will call in that series. 

Mr. Bartlett : I do not see anything in the law — I could not 
find anything in the law by which my particular bonds, if I held 
them, would be called in. 

Mr. Morman: Yes; they are issued in series, and you will 
find that they will be called in. That is the old Landschaft 
principle. 

Mr. Bartlett : It may be the principle, but I would like to 
have you point out the section of the law, if you will? 

Mr. Morman: I do not know whether I could find it just 
now. But the bonds run for specified periods subject to retire- 
ment after five years at the option of the land bank. Any fur- 
ther questions? 

l^-Jr. F. N. Briggs (Colorado) : There is one point, Mr. Mor- 



JAMES B. MORMAN 37 

man, that has not been touched upon yet that I think is quite 
important, not only for this Confei^ence, but for the whole coun- 
try. In fact, there are two things prominent in this act that 
the country should be brought to support. The first, the form- 
ing of this cooperative loan association or national farm loan as- 
sociation. That should be encouraged to the utmost and the 
farmers should be educated and helped in every way to form 
these associations. This is the first legislation we have ever had 
in this country to help the farmers finance themselves on a rea- 
sonable basis, and now let us make the most of it. Second, the 
public is going to be invited to buy these bonds and unless the 
public buy these bonds liberally the system will not succeed as 
it ought to. And I wish you would explain, if you will, just 
how these bonds are secured and what makes them a desirable 
investment. 

Mr. Bartlett: And whether they can be called in at any 
time. 

Mr. Morman : No ; they cannot be called in any time. 

Mr. Bartlett: I thought you said — 

Mr. Morman : That is in case the mortgage is paid up ? 

Mr. Bartlett: Yes. 

Mr. Morman : Well, that is a different proposition. 

Mr. Bartlett: Well, does not that mean that you can call in 
the bonds any time? 

The Chairman : Perhaps I might enter here at this point. 
I think I can get the question, perhaps. The question is this: 
That the bond runs for a specific period of years and that bond 
is not paid until the years are completed. 

Mr. Bartlett : Forty years. 

The Chairman : Forty years. Now, the gentleman raises the 
question of what happens after a retirement of mortgages prior 
to that time under the provisions provided in the law. There 
is, I suppose, temporarily the necessary bonds in place of the 
retired mortgages until other mortgages can be brought in to 
sustain the bonds that have been originally put out. That you 
will find in section 10, page 20 of the act. But the retirement 
and payment feature is found in section 20. 

Mr. Briggs : Explain about the bonds ; how are the bonds se- 
cured and why they are a desirable investment. 



38 MARKETING AND FARM CREDITS 

Mr. Morman : In the first place the bonds are based on first 
mortgages' that are given on farm lands up to only 50 per cent 
of the appraised value of the land, leaving a wide margin of 
security. Those bonds are issued by the United States govern- 
ment on the request of the registrar, who is a public official. All 
these bonds and the banks that issue them, both federal and 
joint stock — because provision is made for both kinds of banks 
to issue bonds so that they can be distinguished — are under 
strict government supervision all the time, so that we have here 
bonds based on first mortgages with a wide margin of security 
under government supervision and all of them tax free — local, 
state, municipal or national ; and not only the bonds, but the 
proceeds of the bonds. 

Mr. Briggs: Guaranteed by the banks? 

Mr. Morman: All guaranteed by the banks; each bond is- 
sued guaranteed by all the other federal land banks. 

Mr. Hughes: Then there is 10 per cent of stock still in the 
local association that stands back of it. 

Mr. Morman : Five per cent only that is in stock. You must 
remember the liability comes out of the man's pocket; he would 
be called upon to pay that in case of failure of the association. 

Mr. G. E. Putnam (Kansas) : I think there is one other ele- 
ment there that will offer a great deal of security, and that is 
this: When the federal land bank is temporarily embarrassed, 
and is unable, perhaps, to pay these interest coupons, the sec- 
retary of the treasury may deposit six million dollars with the 
banks or $500,000 in one bank ; $6,000,000 with all, if necessary, 
to enable them to pay their interest and make the bonds almost 
equivalent to a government bond. 

Mr. Morman : That is what is known as a reserve credit ; 
it makes a total of $6,000,000 that can be advanced at any one 
time to the 12 federal land banks to give them a reserve credit 
to pay off the coupons on their bonds in case of a depression 
in the money market. 

Mr. Stull: Supposing the expense to the association is 
greater than we have expected, and that the time of depression, 
or any other time that the farmer pays his loan and there is a 
deficiency in there : will he get full value for his bond, when it 
might not be worth more than 75 or 50' cents on the market? 



JAMES B. MORMAN 39 

AVill he get his full money back? That is, will he slide out 
from under any liability that might have been incurred"? 

Mr. Morman: Well, you see the associations do not issue 
the bonds, and there is no possibility, as far as I can see, of his 
shirking his liability, because he is a member of the associa- 
tion, and he cannot leave the association as long as he is a bor- 
rower, as long as he pays off: on his mortgage. 

Mr, Stull: But you do not get my idea. AVe will assume a 
fixed liability on all the borrow^ers, and 10 per cent of them 
draw out. Their stock is| not really worth it, because the ex- 
pense at that side of the game is such that their stock has been 
duly absorbed and used, most of it, in expenses. Now, does 
that farmer who pays off first get out from under all that lia- 
bility which was incurred to help him to his benefits"? 

Mr. Morman: Yes; if he is out of the association. 

]Mr. Stull : Then, as the stronger ones draw out the man then 
will get an undue proportion of this expense, will he not? 

Mr. Morman : Unless your association is growing, which we 
will assume; in Avhich case as fast as one gets out, or even be- 
fore he gets out, we will assume that the association is growing 
so that the expenses will be borne equitably right along. Of 
course, if the membership decreases and the expenses keep up, 
why then there will be a proportionate increase of the expense 
on each retaining member. 

Mr. Stull : But part of that expense has already been in- 
curred when I have had my money and got the benefit of my 
low rate. If I draw out does that all fall back on the other bor- 
rowers ? 

Mr. ]\Iorman : Well, the expenses have been incurred right 
along. I hardly think that w^e could assume that the man who 
happens to pay for his loan is responsible for any back expenses 
because he is bearing them as a member. 

Mr. Stull: Well, he is out, though, on the stock. 

jNIr. Morman : On which stock ? 

J\Ir. Stull: The stock that he owns. By what virtue, under 
his guarantee, does he get any money except in that way, or 
pay any. 

]\Ir. Morman : He pays no money unless he is assessed be- 
cause the expenses of the association are more than its income. 



40 MARKETING AND FARM CREDITS 

Then, if you are driven to an assessment, why, of course, he will 
have to bear his share. 

Mr. Stull: And first, if you use the money tliat is in your 
hand, and accumulate that fund by the sale of this stock — 

Mr. Morman: You mean the reserve fund? 

Mr. Stull: Yes. 

Mr." Morman: The reserve fund, is provided for that pur- 
pose. In fact, the law provides distinctly that in case of any 
reduction of that kind and that reserve fund has been partly 
used up, they cannot pay any dividends until that reserve fund 
has been restored to the 20 per cent of the outstanding stock. 

Mr. Stull : Now, in civil matters, in corporations where 
stockholders are sued as a general principle of law, that stock- 
holder who has just sold out to avoid his liability is assessed 
prorata\ for the amount of liability that was created while he 
has held his stock. It is frequently not discovered until later, 
and the courts hold that that was accumulated and created while 
he was a stockholder, and he is justly liable. Is there any simi- 
larity in this case? 

Mr, Morman: Except that I do not like the idea of "selling 
out," because he must pay off his mortgage in order to get out, 
and in that case he is out of the association and has no further 
responsibility. 

Mr. Stull : But you do not get my point. 

Mr. Morman: Yes; I get the point. You are trying to get 
me to admit that that man has a responsibility which he does 
not have. 

Mr. Stull : Not at all. Five per cent of the stock has a dou- 
ble liability, and if there should be possible defaults in his dis- 
trict or in the country so that assessments would have to be 
made on the stock to make good any depreciation on the bond — 
now, supposing that has run on until all of that five per cent 
has been absorbed in meeting these conditions and these ex- 
penses. Now, if he got the benefit of this credit, can he get out 
from under that liability? 

Mr. Morman: If he got out of the association before there 
was any suit taken, of course, he would not be held responsible 
because he would not be a member of the association. 

The Chairman : If Mr. Morman wants to quit — 



JAMES B. MORMAN 41 

Mr. Morman: No; quit nothing; I am in rural credits to 
stay just like this act is here to stay. 

The Chairman : I do not mean it in the sense of pulling 
down the flag. 

Mr. Morman: No; if I can answer the questions put to me 
I want to answer them. 

Mr. David Brown (Washington) : I want to ask Mr. Mor- 
man regarding personal credit. I understood him to say that 
lie would like to see a resolution along those lines, and I have 
had some experience in that and I would like to state the source 
of my interest. I am in the creamery business in the North- 
west. Some 10 years ago there came an occasion where there 
was a lot of people in the Yakima valley had a lot of hay that 
they could not sell for over $3 a ton. The banks were not in 
shape to handle them. And they came to our company and 
wanted to know if we could not buy the cows. "We did not 
have any money in cows, but we arranged with a bank in 
Spokane. We were turned down by two banks, but we saw 
the need and kept at it until we got one of the banks, provid- 
ing we paid them 10 per cent. We were paying seven I think. 
We went back to the Yakima valley and arranged through the 
local bank to handle those loans by putting mortgages on the 
cattle per head and worked that out. It was practically a per- 
sonal credit proposition. We had something like $100,000 
along that line. They were to pay us half of this. One of the 
most influential bankers there today has told me since. He said 
that a dozen or more of those men do eome to him every 
once in a while and thank him for saving their lives. That is, 
they would have gone broke and lost their property and every- 
thing else. I believe that personal credit is one of the biggest 
moves in this country today out in that country. Now, some of 
those fellows do not need that system, but they do need it in 
other parts. I believe it is the greatest move and if there is 
something required along the line of a resolution I would like 
to make a motion to that effect. 

Mr. Morman: Let me say that each of the political plat- 
forms four years ago advanced a rural credit system. Well, 
we have only got one side of it and that is mortgage credit. 
There are lots of things that can be offered as securitv for short- 



42 MARKETING AND FARM CREDITS 

term loans, and the personal credit matter is a thing that we 
are going to have. Now, a year ago we didn 't have a mortgage 
credit system, and perhaps a year from now we will have both 
a mortgage and a personal credit system, and I hope it will 
come. 

Mr. Lambert : The question has been raised, after this sys- 
tem gets established and the banks begin to pay dividends, 
whether there is any limit to the dividends which can be paid. 
Now, for instance, in some of our states we have cooperative 
laws. "We can only pay say, six per cent dividends on the 
capital stock. Is there anything in this law which will limit 
that in case the dividends become really large? 

j\Ir. uMorman : There is no limit in the law, but there is this : 
that the federal land banks are allowed to issue bonds up to 
20 times the amount of their subscribed capital and surplus, 
and they are allowed a margin of one per cent between the rate 
on bonds and "the rate on mortgages. Well, the one per cent 
through the issue of bonds is practically equivalent to 20 per 
cent, but then they have to pay all other expenses out of that; 
so that, when you come to pay all expenses of running the fed- 
eral land bank, I don't think there is very much prospect of 
their getting a very high dividend. But if they should, there is 
no limit so far as the law is concerned. Furthermore, as I said 
once before, government stock in the federal land bank draws no 
dividends, and the profits all go over to the associations. But 
there is also another provision in the law which provides that, 
after $750,000 worth of stock has been subscribed to the federal 
land bank by the associations, that thereafter semi-annually 25 
per cent of all other subscribed stock shall be paid toward the 
taking up of the government stock and gradually retiring it, 
so that finally the government stock is all withdrawn. "When 
that occurs the federal land banks and national farm loan as- 
sociations are all in the hands of the farmers and they get all 
the benefits. If they can make six per cent or sixty per cent, 
let them have it; but they cannot make it, of course, on ac- 
count of the limitations of the bond issue. But whatever they 
make it will go to the farmer, and it is to their interest to sup- 
port the cooperative system here outlined. That is why I 
struggled hard for the cooperative principle, always have, be- 



JAMES B. MORMAN 43 

cause I believe it will accomplish more in this country — 
cooperative buying, cooperative selling, cooperative credits — 
for the farmers, as it has done in Europe, than any other thing 
that I know of. 

Mr. Ferris: (Illinois.) The question was asked early in the 
meeting, or in the discussion, what per cent the farmers would 
have to pay on their loans ; you were not able to tell them. 

Mr. Morman : What per cent they would have to pay on their 
loans ? 

Mr. Ferris: Yes. 

Mr. Morman: No; but I did state afterwards that, in all 
probability, it would be five per cent, because the first decision 
of the interest rate is to be determined by the Federal Farm 
Loan Board and their decision will undoubtedly be based upon 
a prospective rate that the bonds will bear, and consequently 
the mortgage rate will, bear. 

Mr. Ferris: Can not the national banks loan money on farm 
mortgages ? 

Mr. IMorman : I think one gentleman said they could loan 
10 per cent. 

IMr. Ferris : Well, is it a fair question to ask what per cent 
the national bank pays the government for the money that they 
get from them? Couldn't it be determined by the experience 
of the national bank as to what the farmers w^ould have to pay 
to these farm loan banks? 

Mr. Morman : Oh, the national banks put up government 
bonds and have currency issued on them-, it is a different 
proposition. 

Mr. Ferris : What percentage do the national banks pay of 
the money that they have? 
A Voice: Two per cent. 
Mr. Morman: Two per cent. 

]\Ir. Ferris : Why can not it be determined, or will that make 
a little disturbance between the national banks and the farm 
loan banks? 

Mr. Morman : 'No ; there is no relation whatever between 
the national banks and the federal land banks. 

Mr. Ferris: It was discussed here at one of these confer- 
ences a year or so ago; I can not recall the gentleman's name^ 



44 MARKETING AND FARM CREDITS 

but he came out and said most emphatically that the national 
banks did not pay one cent. 

Mr. Morman: Well, he probably knows more about it than 
I do, for I don't know anything about it. 

The Chairman : I think that is a wholly different question. 
It takes in what the national banks pay for their money by the 
various requirements, like a deposit of five per cent which they 
must keep against all bonds and then they must pay also for the 
cleaning of money and everything of that kind. There is no 
advantage, therefore, in the holding of bonds. That is a wholly 
different question, however. I wanted to ask this question : 
Here is a man who owns, we will say, a half section of land, 
and he is a man, a tenant of that land. He pays for the feed; 
he pays for all of the different agricultural operations and even 
including the breaking of the new soil, whenever that is neces- 
sary, and, at the end of the season, he takes one-half of the 
profits, and out of that he pays the necessary expense of thresh- 
ing and everything else, taxes, interest on the mortgage, if there 
is any, etc. Is he entitled under this law to borrow? 
Mr. Morman: Well, do you want my opinion? 
The Chairman : Well, of course I would like to have your 
opinion, and then I would like to know also what the law is. 

Mr. Morman : I am very liberal in my interpretation of the 
act, and I will tell you why; because the first provision says, 
^'This is an act to encourage agricultural development." Now, 
as long as the land is being put to use, to me that man would 
be entitled to borrow, providing he can become a member of a 
national farm loan association organized in the locality of the 
land. Now, if the association elects him into membership, his 
membership would naturally entitle him to borrow, and he could 
not borrow unless he came in as a member. 

The Chairman: Supposing a man like that took the matter 
into his own hands and organized a society in the neighborhood 
of where his farm was located, would he be entitled to do that ? 
Is there anything in the law to prevent him from doing that ? 

Mr. Morman : Certainly not ; let him go ahead and organize. 
We want just such men to take the initiative. 

The Chairman : As I have read the law and stated it, it seems 
to me there is a very nice question of who is a farmer. 



JAMEiS B. MORMAN 45^ 

Mr. Morman : I know that, but the law does not say that the 
Federal Farm Loan Board shall define what is a farmer. The 
only two words there that the Federal Farm Loan Board are 
authorized to define are "equipment" and "improvement." 
That is in section 21, subdivision 4, (b) and (c). 

Mr. Davenport: I have the act here: "Every borrower 
must be engaged or about to become engaged in the cultivation 
of the farm." The question is, what is cultivation"? 

Mr. Morman: Yes. Well, that is it. That would be a mat- 
ter of interpretation and I give it a very broad interpretation, 
because I can't get away from the fact that the purpose of the 
act is to encourage agricultural development. And now, the 
board may pass different rulings from that. They have prac- 
tically done so, and it has raised lots of trouble; but I take a 
very broad view of it. 

Mr. Collins : Mr. Chairman, I would like to ask a question of 
Mr. Morman, and possibly of some of the money lenders here 
jointly. Take the case of the farm land bank lending money 
under this law on a farm which has a land value, say, of $10,000,, 
on which there are buildings appraised at $6,000, hoM^ much can 
the farm land bank lend on that farm, and how much will an 
insurance company or a mortgage company lend on that farm? 
My understanding is that the farm land bank can lend $5,000 
on the land, and can lend 20 per cent of the $6,000, which would 
be $1,200. The farm land bank, in other words, can lend $6,200 
on a $16,000 farm. Now, isn't it customary for mortgage loan 
companies to lend as much as $8,000 on a $16,000 farm and in 
regions where they are lending now at five per cent, wherein is 
the advantage offered by the farm loan bank? 

Mr. Morman : Now, under those conditions there is no ad- 
vantage ; but let me give you a little inside history into that law. 
Originally that 20 per cent was not in there, but when we are 
dealing with congressmen we are dealing with a strange kind of 
human being. 

Mr. Collins : Have not they killed the very purpose of the 
law? 

Mr. Morman: No, they have not killed it; they have modified 
some of its features, but they did get that in the house bill, 
and then they fought in conference until it looked as if they 



46 MARKETING AND FARM CREDITS. 

would never come to a conclusion, and we would not have had 
any bill. But I am mighty glad that we have got something, 
a wedge, because you know and I know what struggles we had 
up there during the month of June to get any deal through at 
all, and while we have got that limitation there of 20 per 
cent on the buildings, why we live in hopes, you know, that the 
time may come — 

Mr. Collins: Well, as a matter of fact the law is now prac- 
tically killed. 

Mr. Morman : No, no ; killed nothing. That is not killed, 
just because they do not lend 50 per cent on the buildings ; that 
doesn't kill the law. They get 20 per cent on it anyhow, and 
then the farmer has got to keep his buildings insured, and he 
may not want that much. 

Mr. Cami3 : Can 't you consider a necessary face card, be- 
■eause there are lots of improvements put on land that are not 
paying improvements and if you let farmers have 50 per cent 
of the improvement value that doesn't have any income, where 
would you come in ? 

Mr. Collins : Is not a silo, for example a better improvement 
than 40 acres of unimproved farm land? 

Mr. Kane: (North Dakota:) Mr. Chairman, it seems that 
the gentlemen all live where money is easy to get. 

Mr. Morman : What state are you from ? 

Mr. Kane : North Dakota. 

Mr. JMorman : Where you pay 10 and 12 per cent ? 

Mr. Kane: We pay 10 per cent on realty mortgages, and we 
•do not know whether we can get our mortgages renewed or not, 
and we have to take off our hats to the bankers every time we 
meet them. 

Mr. Morman: Go on and give us some more of that. I get 
letters from North Dakota where they tell me they are paying 12 
per cent and don't know whether they are going to get any 
money at all. 

Mr. Collins : Mr. Chairman, I just renewed a mortgage on a 
half section farm in North Dakota at a little less than seven per 
cent. 

Mr. Kane : I will explain that to the gentleman. In North 
Dakota there are two parts, the east part and the west part. 



JAMBS B. MORMAN 47 

The east part is settled up and the farmers are well to do. Now, 
to illustrate to my friend from Illinois, I will give him a little 
illustration, and I would like to say to my friend from Illinois 
that some in Illinois are paying seven per cent yet. 

A Voice : I am one of them myself. 

Mr. Kane: Now, gentlemen I will tell you how that is 
handled. The Illinois people send their money out west and I 
believe they are foolish not to send it out for five per cent, but 
they don't send it to the farmers, they send it to the bankers 
and real estate men, and Avhen we want to get a real estate mort- 
gage out there we make out two mortgages. The first mortgage 
goes to the man that furnishes the money, and the second one 
goes to the man that loans the money. Up to last year we could 
not borrow money for any length of time and in only a few in- 
stances could we get them to accept $100 or any multiple. Now, 
what is the condition out there? They do not want to lend us 
money unless we take it for five years. Now, this farm land 
credit association is what we need, because we want to build 
some silos out there. We have got the land. We have got the 
land that will grow alfalfa, that is worth $50 or $60 an acre, 
and we can't borrow at the present time more than $6 an acre 
on it. Who is it makes the appraisement? It is the banker 
that makes the appraisement, and he makes it to his own ad- 
vantage, and if you are a good friend of his he may give you a 
good loan, if you take your hat off to him every time you meet 
him ; but if you are not a good friend of his he don 't give you 
any loan at all. We tried to get money to build a farmers' ele- 
vator. How much could we borrow? We had five men worth 
at least $15,000 to secure the note for $2,000, and they w^ouldn't 
lend us $1,900 on it. That is the way we are tied up in the part 
I live in. And if some of these other gentlemen ar'ound here 
kicking on this land bank association would get out there and 
try to borrow some money they would change their opinion. 

Mr. Du Charme : Does this limit of $10,000 apply to the land 
or the property? For instance, can a man make two loans, a 
loan on two different farms? 

Mr. Morman : That is a question that has come up very fre- 
quently. It looks as if an individual is limited to $10,000 no 
matter how much securitv he has got. It would be an individual 



48 MARKETING AND FARM CREDITS 

matter rather than a security matter. Except this, it might be 
possible in this way : For instance, a case came up like this : 
A man has two farms and he can put one in his name and one 
in his wife's name and they both join the association and they 
can get the $20,000. 

Mr. K. D. Kent, (New Jersey) : Can you borrow money on 
half of your land, or do you have to take the whole farm as se- 
curity ? 

Mr. Morman: No; you can state the amount of land in your 
application. That is a good question. A man, when he ap- 
plies for a loan describes the land he wants the loan upon. It 
may be part of his farm. He may liave a cultivated part of his 
farm and also have wooded land that he doesn't want to get a 
mortgage on, because he might want to borrow on this cultivated 
land to clear that timber land. Now, the law allows him to 
borrow and use the proceeds for improvement. The law also al- 
lows him a reappraisal if he has cleared his land and raised its 
value, in which case he can have a reappraisal and borrow more 
than he could before. 

Mr. Kent : And you could borrow on just half of your land 
and give another company a mortgage on the rest of your land. 

Mr. Morman: Yes, certainly, there is no jurisdiction over 
that whatever, providing your loan is made upon the particular 
land described in your application and the proceeds of your 
loan are used on that land or for some other purpose Avhich you 
specify. 

Mr. Camp : We sometimes ask the question whether a farmer 
who wishes to borrow on farm land and his security in the farm 
land is not quite sufficient to cover the amount of loan that he 
wants to borrow, if he can put in a piece of town property ? 

Mr. Morman : No ; the law distinctly says that mortgages 
shall be on farm lands. In that ease he could borrow up to the 
50 per cent of the appraised value of the land, and if he didn't 
have enough then he could give a second mortgage if he could 
get anybody to take it. 

Mr. Smith : The way the law stands at present, from your 
interpretation, to what extent can that money be used for pro- 
ductive purposes? 

INIr. Morman: "Well, it is specified there in section 12, sub- 



JAMES B. MORMAN 49 

division 4, for the purchase of land, for the purchase of fertil- 
izers, for stocking the farm, for improvements, and for paying 
off an existing mortgage. I think those are the four proposi- 
tions there. Anything of that nature — fertilizers, seed, live- 
stock, implements, improvements, fencing, drainage, all things 
that would be of value so that when they are put there they im- 
prove the value of the property, — those are productive purposes. 

Mr. Hughes: If they get money at five per cent under the 
amortization payment, what would be the annual payments to 
pay it off in 40 years, do you remember ? 

Mr. Morman: At five per cent interest on a $1,000 loan it 
would be about $60, that would pay it off between 35 and 36 
years. There is one mistake that is often made ; the amortization 
plan is stated in terms of percentage, but that is not the case. 
It cannot be stated that way. A farmer comes up and he asks 
for a loan. He says he wants $1,000 and he wants it for 35 
years. "Well, then you see the amount of his instalment based 
upon those two determining factors is not in terms of percent- 
age at all; it might come pretty near one per cent, a little over 
or a little less, as the case may be ; but that is the fact ; the far- 
mer states the amount of his loan and the length of time and 
the instalment is figured out. 

Mr. Hughes: It would be around $60 for 35 years? 

Mr. Morman: It would be around $60 for 35 years. That 
pays his interest and his principal all off at the end of that time, 
and in such small payments it practically amounts to interest, 
and less than a good many farmers are paying interest. And 
that is the great advantage of the amortization plan. ]\Ir. 
Thompson, who was to appear tonight, was particularly to deal 
with that question, and it is a very interesting and important 
question. It is not thoroughly understood, even by our agri- 
cultural editors, I am sorry to say, but it is one of the most ex- 
cellent features of this law, and if for no other reason the act 
itself is justified for having that principle carried out on mort- 
gage loans. 

Mr. J. T. McKee (Alabama) : Suppose that 10 farmers in 
need of money form a local association, how soon can they rea- 
sonably expect the secretary-treasurer to have that money in 
hand ; 30 days or 90 days ? 



50 MARKETING AND FARM CREDITS 

Mr. Morman: It \Adll jjrobably be less than that, as soon as 
the law is in operation. For instance, it won't take very long 
for the secretary-treasurer to make out his application and send 
it up to the bank, and we will assume that the appraisal com- 
mittee has appraised your land and probably wdthin two, three, 
or four weeks, if the loans are granted at all, they will get their 
money. 

Mr. McKee: Another question I had in mind was whether 
they would have to wait for the federal appraiser to come. 

Mr. Morman : No ; because they expect to appoint as many 
appraisers as the demands of the work will call for. 

Mr. Eliot : I think you could use the money to pay off a 
mortgage providing the money had not been placed since the 
law was made ; is that right 1 Is there any question about that ? 

Mr. Morman: No; if a mortgage exists on the land, one of 
the provisions of the law especially is that a loan can be used to 
pay off an existing mortgage. 

Mr. Eliot : So it doesn 't matter when that is placed ? 

Mr. Morman: No. 
' Mr. Millington: Might it not be well to call attention to the 
names and the special amortization tables? 

Mr. Morman: That also is in circular No. 60, issued by the 
United States Department of Agriculture. 



CREDIT UNIONS AND NATIONAL FARM LOAN 
ASSOCIATIONS 

"William R. Camp '* 

As the factory system has developed for the production of 
wrought goods cities have become large centers of demand for 
farm products, markets have become more distant, the pro- 
duction of farm products has become more specialized and 
credit more necessary to carry farmers between the harvesting 
and sale of one crop and another. All business is done more 



* "William R. Camp of West Raleigh, N. C, is chief of the division 
of markets of the North Carolina Agricultural Elxperiment Station 
and Extension Service. 



WILLIAM R. CAMP 51 

or less on a credit basis. Our railroads borrow through the 
issue of bonds at a low rate of interest up to the full value 
of their tangible assets. To borrow is only a misfortune when 
the interest rate is too high and the time of repayment too 
short. The farmer's production of goods is not like a manu- 
facturer's—daily, but seasonal. His planting of a crop is an 
investment upon which it may take a year to realize. Conse- 
quently if he does not make enougli on the last year's croj) 
to provide him, his family and stock with food and his land 
with fertilizer or other needed supplies until another crop is 
grown, harvested and sold he must get credit of some kind 
or other. The period between crops and sales may be any- 
where from a month in the case of dairy farming to a year 
in the case of cotton or grain farming. 

In the Cotton belt states, operating credit takes the form 
of supply store credit. According to the reports of bankers 
the amount of supplies advanced on credit is 58 per cent of 
the value of the cotton crop, or $30,000,000 for North Carolina 
alone. 

The bankers in the 54 cotton producing counties of the 
state estimate that farmers pay on an average 19.2 per cent 
more for goods bought on time than they would had they 
bought them for cash. If these accormts run for 6 months this 
would mean an interest rate of 38.4 per cent. The problem 
of short time credit then is a real one, whether the commu- 
nity knows how to solve it or not. 

Progress of State Aid to Rural Credit 

North Carolina has done more than any state in the Union 
to solve this problem of rural credit through its credit union 
law. Eight other states have passed credit union or coopera- 
tive banking laws for short-time loans. ^Massachusetts, following 
the lead of Canada, passed the first credit union law in the 
United States in 1909. Credit unions have been formed in 
Boston and New York City. But so far as we have been able 
to learn, no credit unions have been organized among farmers 
in any state outside of North Carolina, excepting those pro- 
moted and maintained by the Jewish Agricultural and Indus- 
trial Aid Societv. 



52 MARKETING AND FARM CREDITS 

The North Carolina law is modeled after the Massachusetts 
and New York laws. But the North Carolina law makes pro- 
visions for the promotion and supervision of credit unions by 
the division of markets and rural organization of the North 
Carolina Agricultural Experiment Station and Extension Ser- 
vice, while the latter states have no provision for organizers. 

According to the provisions of the North Carolina law, a 
superintendent of credit unions and one assistant have been 
appointed by the joint committee of the State Department of 
Agriculture and the Agricultural and Mechanical College. 
Upon the application of 12 farmers the superintendent of credit 
unions or one of his assistants in the division of markets is 
required to go and assist them to organize a credit union. The 
division of markets makes no charge for organising, incorpor- 
ating, or examining a credit union. The only expense for in- 
corporation is one dollar for notary fee and three dollars for 
recording. Without some such state aid no more credit unions 
would be organized in North Carolina than in other states. 
Nine credit unions have been incorporated to date, and several 
more are in process of organization. 

Difficulties That Face Organizers 

The sparseness of settlement and isolation of American far- 
mers have made it difficult for them to meet and organize. 
From four to live meetings are necessary' to inform farmers 
of the advantages of a credit union, and to show them how 
to organize, incorporate and operate such an association. 

The community selected for promoting a credit union should 
be five miles or more from a commercial bank and should be 
composed of farmers wlio largely operate' their own farms. 
They must not be so poor that they are mostly dependent upon 
a supply store, though some may be. If they are too well-to-do 
they may be lending to one another already and may not be 
interested in working through a credit union, vliich charges a 
lower rate of interest. There should be, however, some sub- 
stantial farmers to invest in a credit union, not because they 
need to borrow, but because they believe that the credit union 
will serve the community. One such farmer states the value 
of a credit union: "I am a great believer in the credit union 



WILLIAM R. CAMP 53 

as a conininnity asset. So much so, that I hope in the near 
future to see every comrauuity have such an organization. I 
know of nothing at present whicli means more to us as a com- 
munity, bringing our people closer together, thereby uniting us 
in closer business relations with each other." The membership 
of substantial farmers in a credit union will provide the neces- 
sary capital and leadership and help to inspire confidence on 
the part of the bank with which the credit union is to do 
business. 

Credit unions, or cooperative banks, are so new to farmers 
that they cannot be expected to favor their organization until 
an organizer teaches its advantages through several meetings. 
An organizer has to show the costs of the old system of indi- 
vidual credit, the advantages of cooperative credit and the ease 
of operating a credit union. As a farmer needs financing be- 
tween crops the organizer has to point out the necessity for 
accumulating all savings of a country community in a coop- 
erative bank, for lending them on approved security and financ- 
ing needy farmers in the cooperative purchase of supplies. The 
work of an organizer in North Carolina thus primarily is to 
show how a credit union will free its members from exorbitant 
time prices and help them to make cooperative purchases for 
cash, help them in fact to buy in large quantities in whatever 
market they may buy the cheapest. 

How the Lowes Grove Credit Union Operates 

Nothing shows an improved method of finance like an actual 
demonstration. Thus the Lowes Grove Credit Union, the first 
credit union organized in the state, when i-". came time to buy 
fertilizer, appointed a fertilizer committee to find out how much 
fertilizer its members Avould need to buy, and where it could 
be bought cheapest. Finally 114 tons of fertilizer were bought 
for cash at $660 less than if it had been bought in small sep- 
arate amounts on time. The credit union loaned some of the 
members the necessary funds from its own resources and bor- 
rowed $800 from a bank for the other members, so that all 
could get the benefit of buying fertilizer for cash. lu this 
connection it should be stated that the Federal Trade Commis- 
sion has found in its investigation of fertilizer prices that it 



54 MARKETING AND FARM CREDITS 

is the "time-prices" of fertilizer which are excessive. The prob- 
lem of cooperative ordering of farm supplies cannot be solved 
apart from an efficient method for financing such purchase. If 
the farmer buys the supplies needed for operating a farm at 
retail rates he is at a disadvantage as compared with the factory 
producer, who l)uys raw material at wholesale rates. ]\Iore- 
over, a farmer who is tied in the purchase of his supplies to 
some dealer because he is dependent upon him for credit is 
also ti-ed in marketing what he produces. He will have to sell 
w^hen and where his creditor says. 

Financing A Credit Union 

Now, how does a credit union get any funds of its own to 
lend to its members ? From two sources : its share capital 
of $10 a share, which comes from members, and deposits, 
which may come either from members or non-members. A 
credit union cannot legally pay more than six per cent on 
stock and can pay four per cent or more on deposits. After all 
expenses and a dividend are paid and 25 per cent is set aside 
for a reserve fund, all profits may be pro-rated to members in 
proportion to amount borrowed or to depositors in proportion 
to amount each deposits, or equally to both. Thus a credit 
union is a cooperative bank for gathering the savings of a com- 
munity together and for lending them to members at cost, the 
rate of interest not to exceed six per cent. 

Dividing' the Surplus Among Depositors 

The cost of operating a credit union is low. Hence, there is 
a surplus to pro-rate to depositors, which should increase the 
rate of interest to four and a half or five per cent. Many 
farming communities, which have commercial banks, would be 
better off if they had credit unions or cooperative banks in- 
stead. A country bank has an expense of $2,000 to $3,000 
for a building to start with, and an annual expenditure 
of $1,200 to $1,500 for cashier and $600 for a clerk. It 
has a small volume of business to meet these expenditures 
and consequently must charge all farmers Avho do business 
wdth it a high rate for every service performed. A credit uu- 



WILLIAM R. CAMP 55 

ion saves all such expenditures. Its business is done at the 
home of its treasurer, who acts as cashier. It paj's its treas- 
urer from $25 to $50 a year, who takes only two to three hours 
a week to keep his books and to receive and pay out funds. 

How to Overcome Suspicion 

A large proportion of American farmers are not accustomed 
to trusting their savings to any one's keeping. German 
farmers, on the other hand, in 1911, on an average, deposited 
over $10,000 in each of their 17,000 credit unions. This rep- 
resents a confidence in cooperative banking organization which 
our farmers are only beginning to learn. Our farmers are un- 
trained to habits of cooperation and are suspicious of any one 
who wants to start anything new, and are inclined to ask, 
''Who next wants to put his hands in our pockets?" But then 
65 years ago the German farmers were suspicious. That was 
their proper protection from the money sharks. Very slowly 
they learned confidence and to cooperate, until now they have 
over a hundred million dollars on deposit in their own cooper- 
ative banks. 

In Canada the average capital stock of the 150 credit unions 
now in operation in that country is estimated to be $7,000 each, 
while their average reserve fund is $2,000, average deposits 
$12,000, the average deposits of a member $250 to $300 and the 
average amount borrowed $50. 

In spite of our unfavorable conditions we have moved sev- 
eral times as fast as the German farmers. Between Decem- 
ber 1, 1915, and March 15, 1916, seven credit unions were or- 
ganized by the division of markets and rural organization. 
Our credit unions are moving slowly, but so did the Canadian 
Credit Unions 16 years ago, according to Alphonse Desjardins, 
the great organizer of credit unions in Canada, wlio wrote to 
me recently a very encouraging letter in reference to the prog- 
ress of our work. 

Turning- Money Currents Countryward 

The movement of funds has ahvays been toward the large 
trade centers. This drains the rural districts of capital. 
Tradesmen in the cities, who get credit at a lower rate, are en- 



56 MARKETING AND FARM CREDITS • 

abled to take the crop off the hands of the farmer as soon as it 
is harvested, finance its immediate distribution and sale or its 
storage until prices are favorable. It is hoped that the credit 
union, together with the national farm loan association, will 
stem the stream of credit that moves away from the country 
to the city, keep what funds that are in the country'- there, and 
turn the current of cheaper credit from the cities to the rural 
districts for the development of country enterprise. One 
banker stated to me: ''Your credit union provides the machin- 
ery for getting credit into the country. We have plenty of 
funds to loan, but no way of getting them out to the farmers. 
Your credit committee, which passes on the sufficiency of the 
security offered by its members, is just what we want to put 
us in touch with the credit needs of a country neighborhood." 

Forming Farm Loan Associations 

The organization of national farm loan associations, author- 
ized by the Federal Farm Loan Act, by our division of mar- 
kets and rural organization has been relatively much faster 
than that of credit unions. As soon as the Federal Farm Loan 
Act was passed we published an article in the Extension Farm 
News on the advantages of the act. This was printed largely 
by the newspapers of the state and afterwards was published 
in the form of Extension Circular 14. About 12,000 copies of 
this circular have been distributed, direct by mail, through 
meetings, and through county demonstration agents. In the 
same way 10,000 blanks for individual applications for loans 
were distributed. The purpose of this blank was to enable a 
farmer to file an application for a loan without waiting for 
other farmers to act. These individual applications may later 
be grouped together in national farm loan associations, accord- 
ing to township or county, depending upon whether the num- 
ber of applicants is sufficient to form an association in the 
smaller district. The first principle should be to make the 
district covered by an association as small as possible so as to 
reduce the expense of travel of the loan committee. 

As a result of this educational campaign by November 2-4th, 
57 national farm loan associations were formed applying for 
$2,445,725 in loans, and individual applications for $699,325 



WILLIAM R. CAMP 57 

more of loans were received by the division of markets and 
rural organization, making a total of $3,145,050 applied for. 

Notwithstanding all that has been said of the independence 
of the American farmer and his weakness to do team work with 
any one, and his sloAvness to organize, it is turning out to be 
surprisingly true, as shown from our experience in North 
Carolina, that farmers are ready to organize national farm loan 
associations to borrow cooperatively. This is because the old 
system of borrowing through banks and private individuals 
and to a small amount through insurance companies has been 
entirely inadequate. The cost has been too high. The nomi- 
nal legal rate of six per cent has been added to by commis- 
sions and bonuses. There has been no provision for repay- 
ment of. loans in small amounts. Loans have usually been, 
made for one year wdth the necessity of renewal. 

South Needs More Capital 

Under these unfavorable credit conditions the South has 
been largely at a standstill for lack of new capital. While the 
land in farms for the total area forms 46.2 per cent for the 
United States and 71.9 for North Carolina, still the per cent of 
land in farms which is improved is 54.4 per cent for the United 
States and only 39.3 per cent for North Carolina. These fig- 
ures show that a large per cent of our land is in farms, but a 
small per cent of the land in farms is under actual cultivation, 
in fact the smallest per cent for any state among the South At- 
lantic states except Florida. 

The difficulty encountered in promoting national farm loan 
associations is mainly to get the farmers to understand the 
necessity for an additional liability of 10 per cent of his loan 
for the debts of others. But we do not find that farmers object 
to this limited liability of five per cent stock investment, and 
once over, when they understand that it helps to guarantee that 
the security shall be ample and to establish the farmers' se- 
curity in any place in the United States in order to obtain the 
lowest possible rate of interest. Properlj^ understood the ad- 
ditional liability is not a risk but an asset to low^er the rate of 
interest. 



58 MARKETING AND FARM CREDITS 

Whether all the applications for loans will be valid will de- 
pend largely upon the definition by the board of the word cul- 
tivator. A soap manufacturer is considered a soap manufac- 
turer irrespective of whether he puts his hands to any ma- 
chinery or not. "Will a farmer who directs laborers to cultivate 
the land for him, in the same way be considered a cultivator 
even though he may himself not drive a cultivator? In the 
South a man who would apply for a $5,000 or $10,000 loan, 
as is permitted by the law, would probably do no driving 
of a cultivator or plow himself; this is the contrary of what 
would be true in the "West. 

The manifest purpose of the law is to lend funds not to the 
speculator; there is too much of that done already for the 
good of farming to need any additional encouragement, — the 
purpose of the law is to lend money to the man who is actu- 
ally engaged in farming. But where shall the line be drawn? 
One of the Federal Farm Loan Board stated that a man who 
farmed through farm laborers would be permitted to borrow 
under the act. "Will then the farmer who works his farm, 
through croppers, as is largely the case in the South, be per- 
mitted to borrow? The cropper acts under the direction of 
the owner but receives a share of the crop for his labor in- 
stead of money. In one county in North Carolina farm owners 
who operate their own farms find that they have to rent a ne- 
gro cropper 10 acres in order to be able to hire him for a dol- 
lar a day when needed. 

In conclusion, who may become a member of a national farm 
loan association will depend upon the interpretation the board 
gives the law\ We trust that its policy will be broad enough 
to fit conditions in the South as well as in the West. 

The need of the South for a law like the Federal Farm Loan 
Act is imperative, as is shown by the rapidity with which the 
farmers of North Carolina have taken hold to organize under 
the law. With the credit unions, for short time loans, and the 
national farm loan associations, for long time loans, farmers 
will have a complete system of cooperative credit of their own, 
a system which can be made as complete for agriculture as the 
state and national banking system is for the commercial in- 
terests. 



LEWIS CECIL GRAY 59 



CREDIT PROBLEMS OF THE SOUTHERN 
PLANTATION SYSTEM 

Lewis Cecil Gray * 

The problem of the negro farmer is the most difficult of the 
problems involved in the present movement for the socializa- 
tion and hnmanization of American farm life. The magnitude 
of the problem is indicated by the fact that in 1910 the total 
number of negroes engaged in agricultural pursuits (including 
forestr}' and animal husbandry) was 2,893,67-4, or about 23 
per cent of the total number of farmers in the United States. 

The impression is quite general that the importance of the 
negro problem as a rural problem is declining because the ne- 
gro is leaving the country and moving to town. This state- 
ment is often made the basis of a careless attitude toward the 
problem of the rural negro. As a matter of fact, however, the 
proportion of all gainfully employed negroes 10 years of age 
and over engaged in agriculture increased from 53.7 per cent 
in 1900 to 55.7 per cent in 1910. 

We have no satisfactory statistics whereby we may ascertain 
accurately what proportion of the nearly 3,000,000 negro 
farm workers are connected with the plantation system. In 
1910 the census bureau gathered statistics from 325 selected 
counties in 11 southern states. Although this number com- 
prised only about one-third of the total number of coun- 
ties in the South, it covers, with the exception of a few small 
districts, all the territory in which the plantation system is 
known to be an important form of agricultural organization. 
In this area schedules were obtained for 39,073 plantations, 
comprising 398,905 tenant farmers. Making allowance for the 
probable number of white tenants under the plantation sj^stem, 
most of whom are in Texas, the negro tenants operating under 
the plantation system were 43 per cent of all negro farmers and 
57 per cent of all negro tenants. 



* Lewis Cecil Gray is professor of economics in cliarge of tlie Knapp 
School of Agriculture, George Peabody College, Nashville, Tennessee. 



60 MARKETING AND FARM CREDITS 

What Is a Plantation? 

The term "plantation" is defined by the census bureau as 
follows: "A tenant plantation is a continuous tract of land of 
considerable area under the general supervision or control of 
a single individual or firm, all or a part of such tract being 
divided into at least five smaller tracts, which are leased to 
tenants." It is obvious that the outstanding characteristic 
which distinguishes the plantation system from ordinary ten- 
ant farming is the fact that the plantation tenants are subject 
to the supervision of the operator of the plantation. The de- 
gree of supervision varies widely in the plantation districts. 
In many districts it is so complete that the tenant is practically 
a laborer working under the control of the plantation operator 
or his representative, who dictates the kinds and acreage of 
crops grown, the amounts and kinds of fertilizer and seed em- 
ployed, the methods of planting, cultivating and harvesting the 
crop, and even the disposition of the tenants' own time. At 
the other extreme are plantations whose operators interfere 
but little in the actual poliej^ of farming except possibly to de- 
termine the acreage to be devoted to cotton and other crops, 
the amount of fertilizer employed, and other minor details 
which are vitally related to the landlord's interest in every 
section of the country. The tenants are largely left to their 
own devices both in the methods of operation and in the em- 
ployment of their own time. Most of the plantations of the 
South will fall between these two extremes. 

There are three great classes of plantation operators. Per- 
haps the most numerous class are the landowners, who reside 
on plantations or endeavor to operate from nearby towns by 
more or less frequent visits, sometimes residing temporarily 
on the plantation during the most critical periods of the crop 
year. Frequently they employ resident managers. Another 
important class consists of persons who have leased large 
tracts of land which they operate on their own account by a 
regular plantation organization. In many parts of the South, 
however, the local merchant who furnishes the necessary 
credit to the tenants for the year's operations has taken over 
the work of plantation supervision and control, functions which 



LEWIS CECIL GRAY 61 

he exercises sometimes directly, sometimes through employing 
resident managers or riders Avho travel from plantation to 
plantation. 

Surveys Needed in Southern States 

With regard to the details of farm credit in the South, there 
is at present an amazing absence of concrete information. It 
is unfortunate that the commission which investigated so thor- 
oughly the systems of rural credit prevailing in Europe did 
not find it possible to extend their investigations to the 
study of conditions in this country. Some thorough local 
studies of credit conditions in typical regions in the South are 
greatly neaded. I find it necessary, therefore, in describing 
rural credit in the plantation districts, to speak in terms of 
the general information acquired from a personal study of the 
plantation system extending over a period of years — a study 
that was facilitated by the opportunity to spend some months 
during the year 1911 investigating the plantation system in 
Texas, Louisiana, and Arkansas, as special agent for the cen- 
sus bureau. This past week I made a special trip to the well- 
known Yazoo delta region along the Mississippi, south of Mem- 
phis, where I had unusual opportunities to talk with some of 
the best informed and most prominent men of the district. 

The problem of plantation credit is four-fold. It may be 
considered from the standpoint of the plantation owner or 
operator and from that of the tenant class. Each of these 
points of view breaks up into the familiar divisions of mort- 
gage credit and personal credit. I shall first give a few facts 
concerning the credit of the plantation operator, devoting the 
remainder of the paper to the tenant's credit. 

From the standpoint of the plantation owner the problem 
of mortgage credit is probably not more difficult than it is in 
other sections of the country. The South is lacking in the ad- 
vantages enjoyed by the Middle West in the active competi- 
tion of insurance funds, savings bank deposits, and the local 
money lender. Consequently interest rates are considerably 
higher than in the Middle West. In the greater part of the 
cotton region east of Texas, the rate on mortgage loans, in- 
cluding commissions and expenses, is commonly from eight to 



62 MARKETING AND FARM CREDITS' 

ten per cent. In some general farming sections, as around 
Nashville, Tennessee, the rate is as low as six per cent. I am 
told by a representative of one of the large insurance com- 
panies, which has recently entered the plantation districts 
south of JMemphis, that his company lends in the Delta on first 
mortgage security at 5^/2 per cent net. The commission is ly^ 
per cent per annum, making the loan, cost the farmer 7 per cent. 

Farm Loan Act Reduces Interest Rate 

Until a few months ago the gross rate was eight per cent. 
The fall in the rate is attributed to the increasing abundance 
of loanable funds seeking investment. The representative of 
one of the largest insurance companies expressed the opinion 
that the fall in the rate is directly due to the threat of compe- 
tition from the farm loan banks. It is perhaps in point to sug- 
gest, however, that the farm loan law in its present form does 
not seriously menace private enterprise so far as loans on 
plantation lands are concerned, for the limitations on total 
borrowiug power of associations and on the amount loaned to 
individuals are likely to prevent the planting class from resort- 
ing to farm loan banks as a source of mortgage credit. 

The high rates on first mortgage loans in the South are 
partly due to the fact that the South, like the West, is still 
a debtor section, and partly to the conditions peculiar to the 
South — especially to the plantation regions. The most impor- 
tant of these conditions is the lack of a well developed market 
for lands and of well defined market values. Precisely because 
the demand depends entirely on those who control large 
amounts of capital, the market is narrower than if the small 
investor were also included in it. On the other hand, in wide 
areas of the South where small farming prevails, agriculture 
has not yet completely developed out of the earlier stage of 
self-sufficing farming conducted for the purpose of securing a 
living direct from the soil, at most supplemented by money 
products from which a living may be derived by exchange, as 
contrasted with regions where the immediate object is money 
profits on a fixed investment. Other regions have but recently 
passed beyond these more primitive stages of evolution. Con- 
sequently the older conceptions of borrowing as a product of 



LEWIS CECIL GRAY 63 

personal necessity and of a debt as a sort of personal disgrace 
have not passed over into the new conception of indebtedness 
as a form of equity in property and business. 

The margin of security for first mortgage loans in the Delta 
is about 50 per cent with no specifications as to the use to be 
made of the proceeds of the loan. So far as second mortgage 
]oans are concerned, the system is not so well defined. One 
large mortgage house in Memphis has loaned about $1,500,000 
in second mortgage farm loans. The money largely represents 
capital' of private individuals. The margin of security is about 
10 per cent in addition to the 50 per cent margin covered by 
the first mortgage. The interest rate charged by this com- 
pany is 10 per cent. In the Delta, however, second mortgage 
credit is more closely akin to short-time personal credit than 
to ordinary mortgage credit. Indeed, mortgage credit in gen- 
eral has been but slowly differentiated from personal credit, 
and one need go back only three decades to find the beginnings 
of the process.. 

How South 's Credit System Originated 

All forms of credit in the South have their roots in the ante- 
helium system of factorage. The general outlines of the sys- 
tem are so familiar as to require no detailed description. The 
system continued to be the principal source of plantation credit 
until several decades after the close of the Civil War. 

About the beginning of the eighth decade bank credits began 
to encroach seriously on the older system. At present the fac- 
tor's loan as a source of operative credit exists only in those 
parts of the field Avhich the banks by their nature are unable 
to occupy. Strangely enough, this sometimes applies to the 
large rather than to the small planters. A large planter may 
need from $50,000 to $100,000 a year. The average small coun- 
try bank is unable to furnish the whole of this amount by reason 
of national and state restrictions. This creates a need which 
is supplied in part by the factor. 

It is needless to say that this form of credit is very expen- 
sive. It is difficult to determine how expensive, for, while the 
terms of the factor's contract with the planter were formerly 
fairly uniform, bank competition has forced the factor to deal 



64 MARKETING AND FARM CREDITS 

with each ease on its merits. It is common, however, for the 
factor to charge a nominal interest rate in the form of a dis- 
count on the full line of credit granted to the planter at the 
beginning of the crop season, at the same time specifying that 
the amount shall be drawn in installments at certain fixed 
times during the season. This makes the rate higher than the 
nominal rate— probably amounting to from 15 to 17 per cent 
in many cases. Under the old system the planter's agreement 
with the factor compelled the planter to sell all of his cotton 
through the factor. Not only was this the case, but the planter 
must guarantee a certain number of bales — frequently one bale 
for each $10 advanced. If the crop fell short of the 
designated amount, the planter must pay the 2^^ per cent 
broker's commission on the value of each bale of the shortage 
as well as on the crop actually sold. In addition to this, the 
perpetual indebtedness of the planter placed him in the power 
of the factor to such an extent that the latter was often en- 
abled to perpetrate frauds that he would have been deterred 
from under a credit system based on free competition. 

Some of the largest planters in the northern part of the 
Delta are enabled to deal directly with the large banks of Mem- 
phis and other neighboring cities. Such men enjoy the unusu- 
ally low rate of six per cent. The majority of planters, how- 
ever, obtain credit from the local banks at interest rates 
varying from seven to ten per cent according to the character 
of security. The latter includes all that the planter owns, his 
chattels, crops, and his equity in the land being given as collat- 
eral. Naturally, a planter who operates leased land is at a 
great disadvantage because not only is he unable to give land 
as collateral, but the landowner retains a prior lien on the crop. 

Tenant Credit Accommodations Vital 

The really vital credit problem in the plantation economy is 
the credit of the tenant. A great deal has been written on this 
subject, but very little which presents the matter in the proper 
light. I desire to be exonerated from any attempt at being 
sensational or at making an exposure. The subject has been 
treated from this point of view by certain writers, largely for 
popular consumption, with the result that incalculable harm 



LEWIS CECIL GRAY 65 

has been done to the eanse of negro progress in the South. 1 
shall try, therefore, to describe the prevailing practice, giving 
j'oii a picture of the typical rather than of extreme conditions. 

It is a matter of common knowledge that in the plantation 
districts the average negro tenant starts the year with no ac- 
cumulated purchasing power by which he can subsist during 
the crop season. Whatever accumulations he makes consist of 
goods, not of money — that is, more or less clothing, a little 
crude household furniture, some poultry, one or more pigs, and 
possibly a buggy and a cheap horse or pony. Some tenants 
also own one or two mules, and some farm implements, but 
these are renters or "third-and-fourth" hands rather than 
share-croppers. The latter are by far the most numerous class. 
Consequently, the planter must provide food, medical attend- 
ance, and other expenses until the cotton is gathered and sold. 
If the negro is a new tenant, the planter must advance the ex- 
penses for moving to his plantation. So far as food and ordi- 
nary expenses are concerned, the planter follows a regular 
rule — commonly 75 cents an acre per month. Since the planta- 
tion generally maintains its own store or commissary, the ad- 
vances usually consist of orders, tickets, coupons, or plantation 
money, which is to be exchanged for goods at the store. There 
is this incidental advantage, among others, in the practice: 
the store orders are not good for railroad tickets, and the ne- 
gro, without money, finds it difficult to follow his migratory 
instincts, and to leave the plantation, at least before the close 
of the crop year. If the plantation does not maintain a store 
or commissary, arrangements are made by the planter with 
a merchant to provide the tenant with the necessary goods. 
From these sources the tenant receives advances amounting 
to from $150 to $250 a year. 

Sometimes a special credit price is charged for each unit of 
goods purchased. However, the practice is becoming more 
common for the store to sell at regular cash prices. The 
planter then adds a general percentage to the tenant's account. 
In either case the amount that the tenant pays for the credit 
he receives is almost never a matter of agreement. It rests 
usually with the planter to fix the terms. In some cases even 
a protest on the tenant's part may lead to violence, although 



66 MARKETING AND FARM CREDITS 

it is my belief that resort to physical coercion is becoming in- 
creasingly uncommon in the Delta. This is one phase of the 
improvement that is gradually taking place in the negro 's eco- 
nomic status. It must be understood, however, that the negro 
himself is not inclined to protest, for he has little knowledge 
of prices, little opportunity to compare local prices with prices 
elsewhere, and generally a profound indifference to the entire 
matter so long as he satisfies the want of the moment. 

What the Negro Pays for Credit 

There is the widest variation in the amount that the negro 
is compelled to pay for these credit advances. The only thing 
that can be said is that it is rarely less than 25 per cent on the 
cash price of the goods obtained. From 35 to 50 per cent is 
probably the ordinary range, and if the planter is greedy, the 
percentage may be higher. 

The greatest source of loss to the tenant comes through the 
sale of his cotton. Almost invariably this is sold to the planter 
on his own terms. It is the common and frankly acknowledged 
practice to pay the tenant less than the local market price at 
the time of sale. So openly is the practice acknowledged that 
the planter sometimes tells his tenant that he expects to make 
a profit on the sale of his cotton. As a matter of fact, even if 
the negro sold to a street-buyer, he would be almost certain, in 
one way or another, largely on account of his ignorance, to lose 
a considerable part of the value of his crop. The planter, 
therefore, takes what the cotton buyer would otherwise get. 
The main point is that the matter absolutely rests with the 
planter himself. "Within certain limits, the discount on the 
price of the tenant's crop depends entirely on the rapacitj^ of 
the planter. This year it is probably safe to say that the dis- 
count rarely amounts to less than $10 per bale and may rise as 
high. as $25 or $30 in some cases. This does not include the 
speculative profit that the planters have made on account of a 
rising market, after purchasing the tenant's cotton. 

The above are practices which are carried on openly, with 
little attempt at evasion or concealment, at least so far as the 
community itself is concerned. There is also a practice of al- 
tering accounts in the planter's favor. This is a matter of 



LEWIS CECIL GRAY 67 

common knowledge in the Delta, but it is obviously hard to 
prove in specilic instances, and it is impossible to generalize 
safely as to the extent of the practice. I have a graduate stu- 
dent who was at one time a bookkeeper on plantations in the 
Delta. He described the practice as so general that it is com- 
monplace. He told me of one case in Avhich he himself, acting 
under orders from his employers, made a tenant pay for a" 
Avagon three times. It is only fair to say that there are many 
honorable planters in the Delta who would scorn to resort to 
subterfuge of this character, although they will not hesitate 
to reduce the tenant's income by the other methods described 
above. 

If one regards the various payments the tenant is compelled 
to make as interest on the advances received, making allow- 
ance for the length of the period the credit runs, it is clear that 
the money probably never costs the tenant less than 100 per 
cent, and may range as high as 500 per cent. Nothing would 
be more unfair, however, than to regard these various exac- 
tions as iTiterest on a sum of money advanced, and it is neces- 
sary to explain the matter at some length in order to place it' 
in its true light. 

What the Planters Must Risk 

In the first place, the planter bears the entire risk of the en- 
terprise, and an enormous risk it is, for cotton planting is a 
highly speculative undertaking. Theoretically, the share ten- 
ant bears his part of the risk. Actually he does not, for with 
the freedom of movement that the negro now enjoys in the 
Delta, in case of an unfortunate year, the negro is likely to 
leave the planter whenever his debt becomes onerous. There 
are certain parts of the South where this freedom of movement 
does not prevail, and where the negro would be compelled to 
remain and work out his debt. Taking the Delta as a whole, 
I am convinced that this is not the case in that section. Con- 
sequently the planter is likely to lose heavily from bad debts 
in a poor crop year. There were planters in 1914 who paid 
their negroes ten cents for cotton Avhen the market price was 
six. This was not altruism. It was just an alternative to 
charging negro indebtedness to profit and loss. 



QS MARKETING AND FARM CREDITS 

Because of the industrial inefficiency of the plantation ne- 
gro the planter is compelled to provide an expensive system 
of supervision. The owner of a plantation of nearly ten thou- 
sand acres told the writer that his expense of supervision aver- 
aged about $2 per acre. It is true that the planter benefits 
in his share of the crop from this supervision, but the tenant 
also benefits to some degree. 

Rent Is Basis of Practices 

The essential economic justification of the above practices 
res'ts on the basis of rent, not on the basis of interest. The cus- 
tom of dividing the crop between landlord and tenant is so 
rigid that it would be difficult to change the custom. Yet the 
share represents a much smaller rent in proportion to the eco- 
nomic productiveness of the land in the rich alluvial districts 
of the Delta than in the poor sandy uplands, where a similar 
method of division prevails. Even with cotton at 12 cents a 
pound a negro tenant may be able to make as much as $600 as 
his share of the crop, and that without any expense. At pres- 
ent prices the negro's share may be as high as $1,000. Those 
with large families may make a still larger return. Planters 
in the Delta showed me accounts of individuals who had as 
much as $1,500 due them on their year's crop. 

It is obvious that to let a tenant pocket the entire share of 
his crop in a good year, while bearing no part of the risk of 
loss in bad years would be to pay him for his bare labor far 
more than unskilled labor is able to earn in other employ- 
ments or as agricultural wage laborers — for the cropper is in 
reality only a laborer paid by a contingent wage. As it is, his 
condition compares favorably with that of other unskilled la- 
borers. He receives a house free of rent, a small garden, and 
free fuel. His food supply is assured, for it is advanced by 
the planter. He has no serious fear of unemployment except 
that which grows out of the seasonal periods of idleness on 
the plantation. 

In short, it is clear that what the planter takes by an unreg- 
ulated and arbitrary charge imposed as a credit price or by dis- 
counting the price of the tenant's crop is not interest, but 
largely a payment for risk, for wages of management, and for 



LEWIS CECIL GRAY 69 

a margin of rent not covered by the planter's nominal share of 
the crop. It is well known that in the black prairies of Texas 
this extra margin of rent has taken the form of the bonus sys- 
tem.* "With white tenants the form of a contract at least is 
preserved. In the negro plantation districts this margin of 
rent is taken by arbitrary methods. It is this arbitrary char- 
acter of the transaction that makes it ruinous and dangerous 
in the extreme, not only to the tenant, but also to the landlord. 

Plantation System and Industrial EflEiciency 

I hold no brief for the plantation system. It is not the type 
of rural social and economic life that I would chose as the ul- 
timate ideal. There is a very general agreement among some 
of the foremost students of the plantation problem that the 
system is favorable to industrial efficiency wherever planta- 
tion organization and control are highly centralized. Under 
such conditions, as a system of farming, the plantation econ- 
omy is usually far in advance of the economy of the average 
negro owner or the negro tenant who is substantially automon- 
ous in his farming operations. On the other hand, the plan- 
tation system is to be judged by its effect upon the progress 
of the negro. From this standpoint it is fairly clear that the 
negro is most backward in those regions where the plantation 
system has reached its highest development. In such regions 
the school facilities are poorest, the percentage of illiteracy is 
highest, the negro is most primitive and least capable of intel- 
ligently conducting his own affairs. In short, the plantation 
system tends to perpetuate the very conditions that in the first 
instance rendered it necessary. Far from training the negro 
in habits of thrift and economy, the system positively discour- 
ages the development of these qualities. 

In essence, then, the plantation system represents a method 
of industrial supervision and control that was rendered neces- 
sary after the close of the Civil War by the fact that a large 
proportion of the negroes were densely ignorant; thoroughly 
incapable of the exercise of energetic, systematic initiative; 



* The Texas law of 1915 prohibited this bonus and restricts the legal 
charge on rented land to not more than one-third of the gra-in and one- 
fourth of the cotton. — Editok. 



70 MARKETING AND FARM CREDITS 

and almost entirely devoid of thrift. The system grew natur- 
ally out of the ante-helium plantation system by the substitu- 
tion of hired laborers and ultimately of tenants for slaver^'. 
The plantation is, therefore, a phase of industrial evolution in 
the South, deeply imbedded in the economic and social insti- 
tutions of the section. It cannot be altered or abolished out 
of hand or suddenly replaced by some Utopian plan devised 
by idealists. For good or for evil the system is firmly rooted 
in the soil of the South. An attempt at the sudden abolition 
of the system — especially in the typical plantation districts — 
would result in an economic and social chaos resembling the 
state of anarchy which prevailed in the early years of Recon- 
struction. The remedy is more intolerable than the disease. 
It is evident that the system must be gradually modified by 
the elimination of its more objectionable characteristics. 

The greater part of this paper has been taken up with a de- 
scription of existing conditions in a typical and rather re- 
stricted portion of the plantation belt. I would not leave the 
subject without attempting to outline my own ideas with re- 
gard to the direction and scope of a constructive policy appli- 
cable to the gradual improvement in the condition of the negro 
tenant. For the sake of brevity I shall embody my views in 
a series of propositions as follows : 

1. So far as rural credits are concerned, the vital 
need at present is for personal credit to free the tenant 
from the debt — slavery that bars the road oi progress. 
Until this is done, he will not be in a position to take 
advantage o-f a system of mortgage credit. 

2. The districts where the plantation system are 
characterized by the extreme centralization that prevails 
in the Delta offer the least chance for the successful in- 
troduction of a sj^stem of personal credit. This is true 
partly because of the backwardness and ignorance of 
the negro population in those districts, partly because 
the planters would very likely be so unfriendly to such 
an iini ovation that they could easily defeat its success. 
Moreover the plantation will be for a long time neces- 
sary as a means of economic and social control. 



LEWIS CECIL GRAY 71 

3. It follows from this that it would be difficult, if not 
impossible, to formulate any general plan of personal 
credit applicable to the country as a whole, which 
would "fit the needs of the negro farmer or of the poor 
white farmer of the South. It is necessary to provide 
special facilities to meet the peculiar needs of this class 
of farmers. 

4. Any experiments along the line of personal credit 
should be made where they have the greatest chances 
of success — that is, in selected communities of poor 
negro tenants who are substantiall}^ free from the 
control of the plantation system. 

5. It is probable that the initial steps could better be 
taken by private philanthropy rather than b-y the gov- 
ernment. In either case the initial steps should be 
regarded as experimental rather than hailed as a pana- 
cea that w^ill revolutionize the tenant problem in the 
South. It will require a number of years to develop 
a body of experience that Avill make it possible to 
legislate successfully. In the meantime some agency 
must be found willing to risk a few thousand dollars 
in experimentation. 

6. It must be recognized that no system of reform by 
cooperation or otherwise that depends on the primary 
initiative either of negroes or poor wdiites stands much 
chance of success. The fundamental conditions of 
ignorance, poverty, and prejudice necessitate a care- 
fully formulated policy of paternalism, the initiative 
and directive energy coming from above. 

7. Since the initiative and control of any system of 
personal credit must come from above, it is desirable 
that local control be vested in a paid functionary cap- 
able not only of regulating the business affairs of the 
local association, but also of instructing the farmers 
in methods of farm practice. For this purpose the 
county demonstration agent is probably well adapted. 

8. I have made no attempt to formulate in detail a 
plan designed to this end. However, I may suggest what 
seem to me some desirable features. The present need 



72 MARKETING AND FARM CREDITS' 

of the negro' or poor white tenant is goods rather than 
money, for usually money advanced Avill be used for 
whisky, gambling, or other useless objects. Therefore, 
it is probable that a combination of cooperative supply 
and cooperative credit would prove most useful. In 
the initial stages the purchases might be made at the 
local stores. The credit should be arranged for by 
the association backed by the guaranty of the coopera- 
tive bank. The latter could take the crop liens, chat- 
tel mortgages, or other security, which constitute the 
basis for the present credit of the tenant and re-dis- 
count the loan at a regular bank. Some form of joint 
liability should be required. A system of enforced 
saving should be provided similar in character to amor- 
tization of mortgage credit. That is, the tenant should 
be compelled to pay each year a small margin above 
the interest and principal of his loan, a margin which 
will gradually eliminate his dependence on borrowing 
as a source of livelihood. It is not necessary that the 
organization be so conservatively planned as to elimi- 
nate all elements of risk. It is better that the tenant 
pay a fairly high rate of interest, if necessary. Even 
if the system accomplish no more than to loosen the 
present forms of bondage, gradually develop habits 
of cooperation, and stimulate the beginnings of thrift, 
it will prove of vast benefit. 
In conclusion, it must be recognized that the Southern tenant 
problem is fundamentally a problem of education, for it rests 
on ignorance and inertia. A system of cooperative credit must 
be designed as one part of a system of adequate education both 
for negroes and whites. 



ROBERT D. KENT 73 

FUNDAMENTAL PRINCIPLES IN FARM CREDITS 

Robert D. Ejent * 

Kipling in his juugie tales imparts to the animals of the for- 
est a social principle of action which applies also to human 
society. He says the strength of the wolf is the pack and the 
strength of the pack is the wolf. Adapted to the conditions 
of human life the principle might be thus stated: The pros- 
perity, safety, and happiness of men result from that of so- 
ciety in general and the strength and safety of society result 
from the fidelity and labor of individuals for its interest. If 
life is to produce the greatest good for the greatest number 
the law of service must be understood and practiced. 

In designing a structure an architect has in mind as a fun- 
damental condition the special purposes of the building and all 
of his subsequent work of detail is made to harmonize with 
and be subordinate to those purposes. As a primary step in 
the erection of the building a base line is fixed and all of the 
upright lines are made perpendicular to it. The result of this 
systematic procedure combined with wise judgment as to de- 
tail development will result in a satisfactory edifice and one 
properly adapted to its special use. In our legislative action, 
both national and state, our practice is to a great extent a dif- 
ferent one. A law is passed to accomplish this purpose or that 
with but slight, or often no regard to fundamental principles. 
As a result laws are turned out each year by the thousands 
and many of them do more harm than good. They add con- 
fusion to our legal standards, interfere with and retard legiti- 
mate business, and encumber our courts with expensive litiga- 
tion. 

With this as a preamble I will now apply to the question of 
farm credits the principles referred to. Let us consider the 
facts shown by Professor Mead of the University of Califor- 
nia in his statement of the need of an investigation of the con- 
dition of the land question in his state. He says that over 



* Robert D. Kent is president of the Merchants Bank of Possaic, 
New Jersey. 



74 MARKETING AND FARM CREDITS 

1,000,000 acres of laud susceptible of irrigatiou are uuculti- 
vated aud awaitiug settlemeut, aud the eultivatiou of this laud, 
he says, is ueeded to iusure the continued growth and endur- 
ing prosperity of the cities of the state. 

In addition to raising crops for f(5od, clothing, shelter, etc., 
it is important that men be given employment and means to 
earn their livelihood. Stated differently, the problem is for 
society to furnish farms to willing and capable workers and 
these in return will furnish the products of the earth to the 
community. We thus get back to the thought with which w& 
started. The strength of the wolf is the pack and the strength 
of the pack is the wolf. Now for a few basic principles which 
should be followed so that in working out the desired com- 
bination of farms and workers as much good as possible may 
be accomplished without at the same time doing considerable 
harm. Let us get our base line and see that those supposed to 
be perpendicular to it shall be at an angle of 90 degrees. 

Let Aided Person Bear Burden 

It is of prime importance that the individual who is to be 
assisted should bear the brunt of the burden. Any other course 
would be demoralizing to him and put on the other members 
of the community a burden which does not belong to them. If 
the one who is to be helped is relieved of his obligation to be 
thoughtful, industrious and thrifty his manliness will be un- 
dermined. If any burdens properly his become shifted to the 
community at large its members will have their own burdens 
to carry and also a sliare of liis. 

The state should make it as easy as possible for the borrower 
to obtain assistance by arranging systems of cooperation 
among the borrowers themselves and by seeing that their in- 
terest charges and expenses for obtaining loans are kept at 
a reasonable or Ioav rate. It should not, however, become a 
partner of the borrower if this can be avoided. This brings us 
near to the doctrine of socialism and with your permission I 
will give my opinion of that and government ownership and 
regulation. Personally I believe that men should feel the re- 
sponsibility for their own success. Self reliance induces in- 
dustry, thoughtfulness and thrift and makes for the best de- 



ROBERT D. KENT 75 

velopment of the iudividual and for the welfare of the com- 
muiiit3\ Men should have the reward that comes to them by 
putting forth their best efforts, and on the other hand be 
penalized for laziness and shiftlessness. I Avould sum up my 
thoughts regarding goveruineut ownership, regulation and su- 
pervision by saying we should have, of them, as little as pos- 
sible, but as much as necessary. 

Borrower Should Take The Risk 

Now to get nearer the concrete. Tlie individual borrower 
who will reap the special benefit of success should bear the bur- 
den and take the risk involved. If he has sufficient capital to 
invest, so that the organization that furnishes the balance 
needed is made secure, all is well. If, however, his capital falls 
short of doing this, as it often will, my contention is that the 
help needed in the way of additional capital and credit should 
come from those most nearly associated with him — his neigh- 
bors and friends who know him best and can watch and check 
up his progress. They, next to himself, will be the beneficiaries 
of his success, therefore, theirs should be the burden of giving 
him the needed help. If this is not possible the town or town- 
ship in w^hich he is located should furnish the help. If this is 
not feasible the next to rely upon should be the county, and 
lastly the state. If the system is national in its scope it should 
be so only for the purpose of federating the state organizations 
or departments somewhat as the federal reserve banks act 
towards the various banks in their several districts. In other 
words, place the responsibility first on the individual and then 
as may be necessary on the various individuals or organiza- 
tions, beginning with those nearest to him which will be most 
directly interested in his success. 

Local Cooperation an Ideal Assistance 

The ideal form of assistance is based on local cooperation. 
In the proceedings of the Conference in 1915 will be found a 
paper which I read giving the general principles which should 
govern and some details of such a method. It was entitled, "A 
System of Cooperative Farm Credits." It followed the gen- 



76 MARKETING AND FARM CREDITS 

eral plan of building and loan associations and also provided 
a method of federating the separate associations. To those in- 
terested in the subject I would recommend a study of the plan 
proposed. Just here I might reply to one criticism of the plan 
which seems to have some point to it. I suggested monthly 
payments by the borrower for the reduction of his indebted- 
ness and the interest. It was objected that this might be 
largely impracticable for the reason that the farmers' returns 
in many cases were annual and that his payments would often 
have to be carried to the end of the crop year. This criticism 
is valid but the objection could be readily overcome by pro- 
viding for deferred payments in such cases. 

If governmental aid is found to be necessary it should be 
rendered so that in case of failure no severe loss shall result 
to the taxpayers. 

Federal Aid Should be Well Administered 

It is of public benefit that "the landless man shall be con- 
nected with the manless land" and therefore the government 
is justified in furnishing assistance, but it should be done in 
such a way that misfits should not occur if they can be avoided 
and that such underwritings, if made at all, should entail no 
severe or long charge on society. We should not attempt to 
make farmers out of those who are not qualified for such voca- 
tions. This would not benefit the individuals whom it is in- 
tended to help and would entail needless cost to the community. 

A Plan for Aiding- Home Makers 

"When substantial governmental aid is necessary and justi- 
fied I would suggest a plan along the following lines : Let the 
township, county or state own the land and the stock on the 
farms, and enter into a contract with those who desire to oc- 
cupy them. Under the contract supplies might be furnished 
for a few months if found necessary. The returns from the 
farms when received should be to a large extent applied to- 
wards reducing the debt incurred. The government should in 
cases of this kind appoint a supervisor over a certain number 
of the farms, say, 10 or 15, for the first year's occupancy. In 



ROBERT D. KENT 77 

the course of one or two yeurs direction should not be needed 
to the same extent and the number of farmers under one su- 
pervisor might with propriety be increased. Put no more ex- 
pense on each farm than may be necessary to procure good 
results in order that the money of the taxpayer may not be 
needlessly spent or jeopardized. Until the successful working of 
the farm returns enough to make a substantial reduction of the 
indebtedness the supervisors should have full power of direction. 
When a certain proportion of the indebtedness has been liquida- 
ted the title to the farm could be vested in the occupant and a 
mortgage be given for the balance due. If the experiment has 
justified itself this should always follow except in the cases 
of continued drought, or crop failure from other causes. 

If it is found after a sufficient trial that the farmers cannot 
make good, the contract should be terminated by a board or 
committee properly constituted and having charge of the work- 
ings of the system in the locality. If proper examination were 
made of those who desired to be placed in farms before locat- 
ing them, and their adaptability to the vocation is first deter- 
mined, it is probable that a large proportion of them would 
succeed. By all means let the state help in locating willing 
workers in farms and go a great way in furnishing such aid 
as may be necessary if it cannot otherwise be provided. The 
men who thus become farmers should realize that they are do- 
ing more for human kind than those engaged in any other vo- 
cation. They are providing the necessities of life, without 
which nothing could be accomplished and life would cease. 



78 MARKETING AND FARM CREDITS 

RURAL COOPERATIVE CREDIT 

Alphonse Dbsjardins* 

The months, nay, the years of horrors of almost a world-wide 
war that we have been living since August 1914 — and God only 
knows when we may see the end of it — have taught us many a 
lesson of hard and of awful experience. But none perhaps has 
been more striking than the want of equilibrium thus sho"svii 
in the ways and means of equipment between what one may 
call urban and rural industries. While the forces of factory 
activities have had at their command the all-powerful force of 
accumulated capital made available through the channel of our 
banking system, the rural or agricultural industry in almost 
all its varied manifestations has been neglected and left to the 
hazards of an unorganized whole without a systematic help, 
in the shape of organized capital to help it along, as if it did 
not deserve the care and deep concern granted almost lavishly 
to urban industries. 

It can "not be denied, however, that agriculture is the founda- 
tion of national prosperity and national economic greatness, 
and even independence. England, with her powerful navy, of 
which she was and is still so justly proud, is now experiencing 
anxious days about the feeding of her population. The sub- 
marine war is putting more and more her food supplies at the 
mercy of invisible vessels and increasing from week to week 
the already very high-priced commodities in the way of im- 
ported food stuffs. One is forced to recall the tight of the bull 
with the mosquitoes, the big navy being unable to cope with the 
worrying and destroying enterprises of the enemy's submarine, 
sinking vessels after vessels carrying supplies to the British 
people who have to pay higher prices to cover the risks 
the carrying trade upon which they have to depend for most 
of their daily meals. 

No wonder if, under the stress of such circumstances, the at- 
tention of all thoughtful men has been directed more than ever 



* Knight of the Order of Saint Gregory the Great, founder of the 
Canadian People's Banks System; President and Manager of the 
"Levis Caisse Populaire," organized in 1900. 



ALPHOXSE DESJARDINS 71) 

upon the solution of so yreat a i)robleiii and to find a way to es- 
tablish a just etinilibrinm between urban and rural industries, 
in order to give the latter the help of organized capital and 
■credit, in the shape of available loans on reasonable conditions. 

Cooperative Credit Banks Source of German- Austrian Strength 

Who can doubt that one of the sources of the strength of the 
central powers, Germany and Austria, does lie in their 
20,000 rural cooperative local credit banks, catering- to the 
needs of their farmers during this terrible war ! 

But up to this time the question has been more particularly 
a fight between the poorer classes and the usurers who have 
taken advantages of the helpless condition of these classes to 
■enrich themselves by extortions of all kinds. 

I shall refer later on to what has been done by the national 
government of the United States with a view to organize a sys- 
tem of rural credit. 

It is no matter of surprise, therefore, that the perplexing 
problem of adequately and safely supplying the financial 
needs of the laboring and farming classes is one that has 
long attracted the attention of thinkers and philanthropists. 
It was in this connection that the Mont de piete was orig- 
inated in Ital}' several hundred years ago, traces of which 
are still to be found in many large cities of Europe. Although 
hased upon a very commendable desire to help those who were 
in great need of money and credit, the methods evolved proved 
very often inadequate, depending almost entirely upon the 
charity or benevolence of those who took upon themselves the 
onerous duty of providing the necessary funds to carry on the 
operations of those institutions. In fact, the Mont de piete was 
almost purely a charitable establishment, appealing in no way 
to the energetic and invigorating sentiment of self-help through 
the redeeming practice of saving. As was to be expected, the 
defects of this system became more and more apparent as time 
went on, and with the gradual dwindling of the enthusiasm on 
which it was founded, the institution itself waned through 
want of the necessary funds. Hence, the unfortunate borrow- 
ers of the working classes had again to call npon the usurers 
and pay, as theretofore, extortionate rates for loans of every 



80 MARKETING AND FARM CREDITS 

description. It was not until the middle of the nineteenth cen- 
tury that a practical method was discovered, and half a cen- 
tury of success has proved how sound and reliable this new sys- 
tem is when applied with common sense and with due regard 
to local requirements and circumstances. 

Origin of Credit Systems 

It is to Germany that we OAve the fundamental idea of this 
most beneficent and practical innovation. Schulze-Delitsch 
and Raiffeisen, without concerted action, but animated b}^ the 
same idea of helping the poor, devised systems, similar in prin- 
ciple, whereby the use of credit, so advantageous in the higher 
spheres of trade and industry, could safely be extended to the 
masses of the people — the small folk, farmers, laborers, and the 
like. The first experiments with the new system were made 
about the year 1850. It was, however, some years before its safety 
and feasibility were generally recognized, even in Germany, 
whence it gradually spread to other countries. But its subse- 
quent development has been marvelous, and it has taken a firm 
root almost everywhere with equal success when the pioneers 
have been wise enough, as was the case with Signor Luigi Luz- 
zatti in Italy, to take into due consideration the circumstances 
and the prejudices with which they had to deal, and to modify 
it in such a way as to suit the varying conditions of their re- 
spective communities. 

Unlimited Liability Insisted Upon 

At the start Sehulze and Raiffeisen rested their cooperative 
banks upon the principle of unlimited and joint liability" of the 
members, the former requiring the cooperators to provide the 
necessary funds by subscribing and paying large shares, with 
a view to impressing on the members the necessity of thrift if 
they would expect credit later on. Raiffeisen, on the other 
hand, would not admit the share feature, believing unlimited 
and joint liability sufficient to attract savings deposits ample 
enough to meet all the requirements of the borrowing mem- 
bers. But both Sehulze and Raiffeisen insisted upon the ex- 
clusively local character of their banks, the sphere of their ac- 
tivity being restricted to a very small territorial area, say a 
ward in a large city, a parish, or a municipality in a rural dis- 



ALPHONSB DBSJARDINS 81 

trict. And in this principle lies the very essence of the safety 
of the institution, as Avill be shown later on. 

Improving the Liability Situation 

The subsequent elimination of the unlimited-liability feature 
of these banks in many countries, so far from justifying the 
fear entertained by the great founders of the system, has re- 
moved obstacles that would, in numerous instances, have inevi- 
tably deprived the population of the immense benefits that 
they have enjoyed by adopting it in a more suitable form. The 
illustrious father of the Italian Banche Popalare was the first 
to depart from the principle of unlimited liability, contending 
that in his country it was not viewed with favor by the masses, 
and, moreover, that it was not required for securing the neces- 
sary funds; experience, has shown that these funds have been 
abundant at all times. He therefore recommended a milder 
form of liability based on the amount of the shares subscribed ; 
and the admirable success, of his banks is evidence that he was 
right. The same principle is now being adopted even in Ger- 
many and many other countries that have closely followed the 
German example. Taking a still broader view of this question, 
and considering the decided hostility of our people to anything 
like wide and, therefore, more or less unknown liability, I 
adopted in Canada an entirely new regime similar to the pre- 
vailing system of the savings banks of the New England states, 
where there is no capital stock, the depositors alone providing 
the funds and enjoying to the fullest extent the right to with- 
draw their money almost at will, a mere notice being required 
if the necessity of so doing arises. 

Our working capital is composed of shares and deposits, the 
difference between them being more of a moral character than 
a practical one, so far as the member is concerned; for his lia- 
bility is the same in either case, his shares and his deposits be- 
ing alike withdrawable just as are the deposits in an ordinary 
banking depository. 

Distinction Between Shares and Deposits 

The distinction between a share aud a deposit is that the 
former is made up of savings with a view of meeting future 



82 MARKETING AND FARM CREDITS 

contingencies more or less remote, a kind of time deposit, while 
the latter is money put aside for almost daily use, like the bulk 
of the funds put in banks and withdrawable by check. 

This regime of a withdrawable capital was sanctioned by 
law in France as long ago as 1867, with the passing of the leg- 
islation authorizing the organization of societies with a vari- 
able membership and capital, the capital being liable to varia- 
tion by the admission of new members, or by the subscription 
of new shares on the j^art of the old members. 

As will be readily seen, the main idea of this system is ex- 
actly the same as is to be found in the uneapitalized savings 
banks of the United States, but with this most commendable 
feature, that the funds thus accumulated are utilized to meet 
the needs of the very classes from which the customers of these 
banks are drawn; in other words, the savings of the working 
classes are put at the disposal of such working people as hap- 
pen to be in need of money for provident and useful purposes, 
not for extravagance or ill use, thus preventing their having to 
appeal to the professional money lenders or usurers at an enor- 
mous if not ruinous expense. One can hardly realize how 
beneficent such a system can be if properly worked upon prac- 
tical and safe principles. Experience of more than half a cen- 
tury elsewhere, mainly in Europe, and of 16 full years in Can- 
ada, proves conclusively that institutions of savings and 
credit, in the modified form above indicated, are easily and 
safely practicable among the humbler classes. 

Now, it is obvious that such a credit system must be worked 
upon different methods and with safeguards distinct from 
those to be found in the higher banking sphere. The require- 
ments do not very materially differ in their intrinsic nature, 
although larger in the latter case than in the former; but the 
ways and means being different, so the methods must differ. 

In the banking system the capital is fixed; in the cooperative 
credit regime it is withdrawable, and therefore variable. 
Hence due regard must be had to this particular feature of di- 
vergence. The banks use to a very large extent borrowed 
capital in the shape of deposits from the general public ; so do 
the people's cooperative banks, but in their case this capital 
is provided by the members either in the form of withdrawable 



ALPHONSE DESJARDINS 83 

shares or of mere deposits. 

The banks do business with the general public, either bor- 
rowing on the confidence they enjoy or loaning to whosoever 
offers what is considered a good banking security. The Coopera- 
tive people's banks are associations dealing only with their 
members. The bank being an aggregation of capital, the char- 
acter of the shareholders is not scrutinized in any way, the 
cooperative people's banks being an association of persons; 
qualities and good habits are predominant, not the funds they 
can bring to the society. The banks in doing business with 
the general public may loan money to parties thousands of 
miles away; the cooperative people's banks on account of their 
special character do not loan funds outside their immediate 
vicinity — in other words, beyond the very locality Avhere they 
are worked — refusing even members who have gone abroad, 
unless a resident member holds himself responsible for the 
faithful repayment of the loan and is considered perfectly re- 
liable in every way. The banks being a concentration of capi- 
tal, the capital alone is paramount, and the system of one vote 
one share prevails as well as the vote by proxy ; the cooperative 
people's banks being associations of persons or individuals, the 
person is paramount. Hence the principle of only one vote, 
without regard to the number of shares held, and there is no 
vote by proxy, except for corporate or public bodies. The 
banks being organized by capitalists, or those that have money 
to spare, which they can dispense with for a long time, the 
amount of the share is generally a larger one than a working- 
man or a poor man can afford. 

The cooperative people's banks being intended for people 
who have no money, except what they can save by very ymall 
sums, putting a few cents aside weekly, the shares must be of a 
few dollars only, payable by small installments. Some of the 
most powerful cooperative banks in Europe have started with 
$4 shares, payable two cents a month. This and the withdraw- 
able feature of these credit unions are necessitated by the cir- 
cumstances of the desired members and are adopted in order 
to induce the largest possible number of the honest working 
classes to join the societies and reap the benefit they offer. 



84 MARKETING AND FARM CREDITS 

Control of Cooperative People's Banks 

With these differences in view it is easy to realize how ap- 
propriate are the principles laid down for the management of 
these cooperative people's banks. 

Three boards are chosen by the annual general meeting 
called, respectiveh^, the board of administration, the commis^ 
sion on credit, and the board of supervision. 

The members of each of these boards must be distinct; that 
is, one member can not be on two boards, exception being made 
for the president of the society, who may be ex-officio a mem- 
ber of the commission on credit, in order that he may be in a 
position to acquaint the board of administration with all that 
is done in this important body, the motives and reasons upon 
which its decisions are based, and the propriety of measures 
having for their object the increasing of the funds of the so- 
ciety. 

The president being, or supposed to be, the best man on this 
general board, and this board being selected out of the best 
men in the society, his moral authority is large, and so is his 
responsibility. It is therefore but fair that his guiding in- 
fluence should be strengthened by corresponding opportunities 
for supervision and advice. He is, as just stated, the only ex- 
ception to the rule that one person can not be member of more 
than one board or commission, the object of this rule being to 
avoid any dividing or shifting of responsibility. 

"Without going into every detail, let us next consider the 
various duties to be discharged by these boards. 

The board of administration has general powers of super- 
vision and control over the affairs of the society. It controls 
the admission and expulsion of members, sees to the transfer 
of shares, if any, makes all necessary recommendations to the 
general meeting in connection with the dividing of the profits 
of the year, the disposal of which is not already provided for 
in the constitution, approves or suggests any desirable amend- 
ments to the bylaws, submits to the general meeting any in- 
crease in the number of shares that may be held by, or the 
amount loanable to, one member, appoints the manager and 
other officials required, and exercises all the necessary admin- 
istrative powers not specially assigned to the two other boards. 



ALPHONSE DESJARDINS 85 

The commission on credit deals only with the loans submitted 
to it through the manager. It makes bylaws determining the 
conditions upon which the loans are to be made, the security 
exacted, apart from the moral qualities which are j)aramount, 
the rate of interest to be charged, and the proper repayment of 
such loans. The fixing of the rate of interest upon loans must 
be made with due regard to the prevailing rates in the locality 
for similar loans and at lowest rate consistent with safety, hav- 
ing in view the proper interest on the capital in order always 
to offer a legitimate inducement to members to increase their 
holdings and therebj^ keep abundant resources for the borrow- 
ing portion of the membership. No loan can be made unless 
the members present are unanimous. In case of refusal for 
want of unanimity, the would-be borrower can appeal to the 
board of administration, and the decision of this body is final. 
The members of the commission on credit can not borrow either 
directly or indirectly. 

How Loans Are Made 

As the granting of loans must be considered to be the most 
iinportant duty of the commission on credit and therefore de- 
serving the closest attention, it must be stated here that the 
borrower is always requested to declare distinctly the object 
for Avhich he asks the loan and how he intends to repay it. If 
the object is an improvident one in the opinion of the commis- 
sion, it must not be granted for any consideration or under any 
circumstances, be the security of the highest character. No- 
person is allowed to borrow if it is not to effect an economy or 
for a productive purpose. This golden rule, this essential prin- 
ciple, has always been enforced and has worked wonders as a 
measure of safety. The character and habits of the borrower, 
as Avell as of his family, have of course to be inquired carefully 
into in order to assure not only his willingness but also his 
ability to reimburse the loan. The moral security is para- 
inount, and refusal must follow if this security is not forth- 
coming, however reliable may be the other guarantees offered, 
because the contrary will inevitably bring trouble and discredit 
upon the society. Thus honesty, industrious habits, good con- 
duct, and thrift become valid and negotiable assets for the poor 
man. 



86 MARKETING AND FARM CREDITS 

Repayment of Loans 

The loan must be repaid regularly and faithfully. The con- 
ditions in most cases are those offered by the borrower himself, 
if considered reasonable and fair, but once accepted he must 
be held strictly to them, unless there is. a case of force majeure, 
like sickness or unemployment. Punctuality is a virtue that 
must be taught. Its practice will confer such great advantage^ 
that the borrower himself will soon appreciate them. 

The interest is usually made payable every three months, but 
all installments paid in are deducted from the loan, the inter- 
est being computed upon the balance only, and so on until the 
whole sum is repaid. 

The board of administration is renewable half or one third 
every year. The commission on credit and the board of super- 
vision are elected every year, and are composed, say, the for- 
mer of four and the latter of three members. But of course 
the number will vary according to circumstances. 

The powers of the board of supervision are of the widest 
character, including the ordinary duties of auditors. In fact, 
its functions may be best described as those of a general meet- 
ing sitting en permanence alongside the officers chosen to ad- 
minister the affairs of the society. This board may, and in 
some stated cases must, call at any time a general meeting and 
submit to it, as representing the whole society, an account of 
the acts of the commission on credit. 

Officers and members of the boards give their services gra- 
tuitously. None can receive one cent either as remuneration 
or indemnity. The manager and clerks, if any, alone are paid. 

The boards meet as often as the affairs of the society require. 
The manager, whose duties are very important and whose 
services are most valuable to insure the success of the associa- 
tion, should be selected, with care and wisdom, from among the 
members, of the board of administration or must liecome a 
member before being appointed. 

In a democratic organization like the one here described, it is 
hardly necessary to add that the general meeting is supreme, 
and intervenes as often as required. It must further be re- 
marked that it fixes from time to time the maximum amount of 
shares that a member can hold, the maximum amount that can 



ALPHONSE DESJARDINS , 87 

be loaned at one time to a member, the annual dividend to be 
paid on shares, and the percentage of the net profits to be ap- 
propriated annually for the guarantee fund, or other funds, if 
any. 

Apart from good management, certain principles must be 
strictly adhered to if the success of such an association is to be 
assured. Of these the most important is that the bank, to be 
truly cooperative — that is — in order to arouse the interest of 
every one of its members and to induce them to extend to it 
the benefit of their own personal experience — must restrict its 
activity to a very small area, or if formed in a trade union or 
some similar organization, then it should not go beyond the 
membership of such a society to enlist members. The object 
being to associate together people that have a mutual knowl- 
edge of their moral worth, this could not be easily attained if 
the credit union were to accept members over a large area of 
territory or from the population of a large city. 

Cooperative Banks in Large Cities 

True, there are instances in Europe where such cooperative 
banks have been very successful in large cities, the Banche 
Popolare di Milano, called the jewel of cooperative credit of 
Italy, being the most striking example. "Without denying the 
force of such cases, I believe that, as a matter of principle and 
safety, it is better to restrict the field and make it as narrow 
as possible, consistent with the requirements of the existing 
circumstances. Above all, in America, where the population is 
more fluid, so to speak, not having to the same degree that 
character of permanency which is to be found in European 
cities, this principle offers a safeguard that can not be dis- 
pensed with without grave danger. It must be borne in mind 
that the object is not to create huge concerns with large funds 
at their disposal, but small societies for the benefit of the 
masses, Avliere needs can be attended to with a comparatively 
small amount of loanable capital. Moreover, the union, mov- 
ing in such a small sphere of activity, is less liable to be de- 
ceived by borrowers as to their good character, the honest 
, utilization of the funds, their standing, and their means to re- 



88 IVIARKETING AND FARM CREDITS' 

pay the loan as agreed, all of which must be ascertained before 
the money is handed over. 

Borrowers have also to state distinctly for what object they 
want loans, and after the proper officers have satisfied them- 
selves that such object is a good one — that the parties will in 
all probability benefit by it — that their experience, their good 
judgment, industry, and energy will successfully utilize the 
funds put at their disposal — these officers, by the fact that the 
transactions are only local, are in a much better position to 
follow up the borrowers and ascertain that the money is faith- 
fully invested in the way stated. Thus this rule tends to the 
safety of the union and protects it against losses — a view which 
is confirmed by practical every day experience. 

When a member is admitted, the board of administration has 
to be satisfied that he is honest, upright, and industrious ; fur- 
thermore, a new inquiry is made when the same individual ap- 
plies for a loan. The commission on credit has to look care- 
fully into his character and be certain that the would-be bor- 
rower possesses the required qualities ; for these moral assets 
are the very groundwork of his credit. A man may not be 
wealthy, but nothing prevents him from being honest, thrifty, 
and industrious, and with such qualities he will in most, if not 
all, cases be able to repay the amount borrowed. This, again, 
can much more easily be ascertained if the cooperative bank 
has but a narrow field of activity. However, all this does not 
preclude the association from taking additional measures of 
security in the way of indorsers or other substantial guaranty, 
which, indeed, is generally done until the borrower has estab- 
lished a first-class reputation for himself by his punctuality in 
meeting his installments or payments when due. 

Passing' Upon the Loan 

Moreover, the amount that can be loaned at any time to one 
member is always passed upon by the general annual meeting, 
having, of course, due regard to the funds available and the 
necessity of providing useful employment for all the money at 
the disposal of the society. Thus the danger or possibility of 
loaning too large an amount to one individual is surely avoided. 

Loans mav be made for a long time, even for 10 or 15 



ALPHONSE DESJARDINS 89 

years, provided tlie installment plan is adopted, once the guar- 
anty fund has reached a certain proportion of the general as- 
sets. Furthermore, it is a very strict and rigidly enforced rule 
that the smaller the loans the greater is the preference they en- 
joy; in other words, the small borrower has always the uref- 
erence over the larger one, this being considered as consistent 
with the spirit and object of the society. 

The stability of such a credit union is increased and insured 
by the rapid formation of a guaranty fund, to be eventually 
equal to, if not more than, the maximum amount of paid-up 
shares and deposits at any one time. This fund is early ac- 
cumulated by means of annual contributions from the net 
profits. These contributions should be relatively large to be- 
gin with, say, 20 per cent, or one-fifth of the net earnings. 
When, as will soon be the case, the fund shall have reached an 
amount affording a fairly substantial security, the percentage 
can be lowered safely, not less than five per cent, however, until 
the said fund is completed as provided for. 

The shares being withdrawable in order better to meet the 
requirements of the poor, for whose benefit these unions or co- 
operative banks are designed, the guaranty fund above de- 
scribed was devised so as to offset any tendency to instability 
entailed by that feature. In the New England savings bank 
system the law fixes a very small percentage of the annual net 
earnings as a contribution to such a fund, the total amount of 
which is only from 5 to 15 per cent of the deposits held. This 
fund is to meet possible losses in the investments of the banks. 

In our cooperative people's banks the same fund has an ad- 
ditional object, being regarded as the real nonwithdrawable 
capital of the society, and this explains why it is allowed to ac- 
cumulate until it reaches an amount equal to the total of the 
paid-up shares and deposits at any one time. 

Thus, by perseverance and stringent provision for the sta- 
bility of the institution, the laboring and farming classes are 
enabled to create a treasury owned and controlled by them- 
selves, to which they and their descendants may look for 
credit; indeed, doing along this line what is done in other 
spheres of activity, as for instance, in the municipal life, where 
future generations will enjoy the benefit of all the improve- 
ments made by their predecessors. 



90 MARKETING AND FARM CREDITS ' 

The guaranty fund has also the advantage of increasing the 
confidence and the interest felt by the members, on which de- 
pend the vitality and the very existence of their association. 

Encouragement of Thrift 

One striking feature of these cooperative credit unions is that 
they are excellent local savings banks, stimulating thrift, bring- 
ing out hoarded mone}^, and thus conferring on the general 
community the benefits resulting from capital properly in- 
vested. However small a village may be, it can organize such 
a union, which will offer to its people all the benefits of the 
ordinary bank — except, of course, the peculiar advantages de- 
rived from its larger sphere of action — and will extend the 
joractice of thrift to almost every home in the immediate lo- 
cality. 

To sum up, the cooperative bank that I have endeavored thus 
to describe borrows from and lends to its members. It bor- 
rows from them by receiving their savings either in the shape 
of shares or mere deposits, for thrift must precede credit. This 
is a fundamental principle which it would be dangerous to de-. 
part from, even if it could be done. 

Advantages of Cooperative Banks 

The advantages of such cooperative banks are very numer- 
ous and far-reaching, among which the following are, per- 
haps, the most striking: 

Their close proximity to the saver and borrower. 
Their adaptability to local wants of all kinds, and 
their ability, through the enjoyment of local confi- 
dence, to attract the available resources of the com- 
munity. 

Their familiarity with their clients, who are the 
members, and their influence over them arising from 
their all being members of the same labor union or 
residents of the same village, town, or city ward. 

Their special mechanism allowing them to make the 
smallest loans and to undertake transactions of the 
pettiest kinds, in compliance with local needs, pref- 



ALPH0NSE5 DESJARDINS 91 

ereuce, indeed, being deliberately given to the hum- 
bler demands. 

Their ability to assist in a general or particular 
liquidation of debts, especially in the case of farmers 
whose property is heavily mortgaged and where the 
repayment is made burdensome by provisions of an 
onerous character. 

Their ability" to work cheaply, almost gratuitously, 
being thus in a position to supply cheap credit to their 
members. 

Their accumulation of local savings and the profits 
thereupon, until they form a capital for the benefit of 
the members and borrowers. 

Their abilitj^ to act as agents for their members in 
certain circumstances and outside their restricted field 
of activity, more especially for the benefit of farmers, 
whose needs of this kind are greater than those of the 
workingmen. 

Their power of influencing borrowers toward a 
beneficent use of credit and of supervising the utiliza- 
tion of loans in accordance with contract. 

Their tendency to group themselves into federations 
for mutual help, development, inspection, instruction, 
and audit. 

Their steady and continuous educative influence in 
matters of thrift, association, and self-help, by their 
constant presence, their daily object lessons, by their 
frequent, though easy, calls upon the activity, thought, 
and services of their members. 

Their tendency to develop high forms of individual 
capacity, of public life, and of national character, and, 
last and most desirable, their powerful influence in 
calling forth habits of thrift, economy, and prudence, 
guiding expenditure into productive channels, grant- 
ing credit for productive and useful purposes only, 
and in promoting union and associated action among 
units which, but for them, would be isolated and in- 
effective. 



92 MARKETING AND FARM CREDIT'S 

Cooperative Banks Gain People's Confidence 

Being administered by responsible officers of the local popu- 
lation's own choice, these local banks, of which everyone can 
he a member, soon and rightly gain the confidence of everyone. 
Unlike the ordinary savings banks, they have not a mere slot 
in their wall through which to receive money, but a mouth 
wherewith to give advice, a heart wherewith to feel, and a 
credit organization designed and specially fitted to help by 
loans the very people who provide the funds. In their keeping 
the depositor or member — for both are one and the same indi- 
vidual — may, so to speak, see his money, see it safely held, see 
it laid out profitably in the locality, benefiting the district and 
producing more money, whereas elsewhere it disappears into 
the large monetary market, absorbed in huge financial schemes 
sometimes worked out for the squeezing or the economic detri- 
ment of the consumers, while the poor men, the very clients 
who have contributed to the accumulation of this wealth, are, 
as a class, the victims of extortionate money lenders. Organ- 
ized by and entirf."y under the direct control of the farmers 
and laborers who are almost the entire clientele of these money 
lenders, the cooperative banks offer the best means of putting 
an end to the frightful cancer of usurj^ that is causing so much 
suffering in this very part of the body politic. It is an unde- 
niable fact that no law, no matter how stringent or how rig- 
idly enforced, can stamp out or even lessen usur3^ in an appre- 
ciable degree. Centuries of experience have demonstrated this 
truth. Usury exists because there are pople who want money, 
and are ready to borrow it at any price where there is no 
organized machinery offering it at a reasonable rate. Let 
these people have their wants provided for in a human and 
business-like way, and usury will soon disappear as surely as 
snow melts away in the spring. 

Why There May Be Opposition To Cooperative Banks 

The proposal to introduce such an institution into a country 
often gives rise to objections, which, however, are, as a rule, 
based upon ignorance or a wrong conception of the real nature 
of these cooperative credit unions. It is, for example, often 



ALPHONSE DESJARDINS 93 

alleged that existing banks would suffer from the competi- 
tion of the newcomer. But is this objection founded upon 
facts and has actual experience proved it to be correct? 

In the first place, this new organization in no way invades 
the field of activity of the banks; it strikes another soil; a 
stratum unknown to these financial bodies. Organized to meet 
the needs of the highest sphere of trade industry, and for the 
benefit of larger enterprises, the ordinary banks have neither 
the equipment nor the opportunity to cater to the wants of the 
classes for which the cooperative banks are exclusively in- 
tended. This explains why the money lenders' business is so 
widespread and usury so prevalent and profitable where such 
an institution does not exist. People in need of money must 
go to the usurers for want of a better medium. Experience 
has shown in Europe that the banks, even the largest, have not 
been slow in recognizing this fact and have, therefore, ceased 
to oppose the cooperative banks, nay, have even very materially 
aided them. 

Experience, too, soon demonstrated another potent fact, 
namely that these very modest financial institutions act as ex- 
cellent feeders to the higher banks, by stimulating and teach- 
ing thrift in a sphere inaccessible to the latter or to any other 
similarly organized institutions, and by depositing the surplus 
funds that the cooperative banks must keep constantly avail- 
able and do not utilize in their every-day transactions. I could 
mention here many of the largest financial institutions of the 
world that go out of their way to assist in the organization of 
such parish or cooperative banks, or, when so organized, aid 
them by special or preferential treatment in order to insure 
their success and prosperity. 

Another ob.jection is that the farming and laboring classes 
would be unable to work out such a scheme. But why should 
the farmers, laborers, artisans, and mechanics of America be 
less intelligent, less able to learn by practice how to manage 
these unions? Or are they less honest than their brethren of 
the various European countries, or even East India? Surely 
not. 

Objection might also be based on the shifting character of 
the population, but that difficulty can be overcome by special 



94 MARKETING AND FARM CREDITS 

precautions and proper safeguards. I feel confident that the 
genius of our American nations can easily find and apply an 
adequate remedy to this particular state of things, for, after 
all, this difficulty had to be faced to a certain extent by the 
ordinary banks, and they seem to have succeeded very well. 
Other means might be devised for the protection of credit 
unions and be as successful in their way as those chosen by the 
existing banking institutions. 

Cooperative Banks and Savings Banks 

It may also be argued that these cooperative banks would 
compete with the savings banks already in the field and tend 
to divert their funds into their own treasuries. This is hardly 
probable. But even if it should so happen, is that a good rea- 
son for putting aside a more perfect organization in order to 
avoid damaging an inferior one ; for enriching the usurers by 
depriving the masses of the people of a means to obtain loans 
at a fair rate of interest ? Surely the savings institutions were 
established to benefit the people, not to enslave them ; in other 
words, the savings banks were instituted for the public, not 
the public for the savings banks. But such a fear is absolutely 
unfounded and need not be considered, for is it not a well- 
established fact that the more numerous the depositories for 
savings, the larger the inflow of funds? And why? Because 
each one of these depositories attracts its own custom *^rs, 
offers special inducements that tend to increase the number of 
its clients, and, in the end, by the accumulation of small sams, 
creates an ever growing capital. The savings banks them- 
selves have not competed in a damaging way with the banks 
previously established, but have, on the contrary, been help- 
ful in teaching thrift, foresight, and providence, and thereby 
increasing the public wealth. And the same result may con- 
dently be expected from this new system, while its benefits will 
be larger, as it covers a larger area than the existing institu- 
tions. In fine, it is almost a truism to say that the more 
numerous and varied a country's savings institutions are, the 
higher is its development and civilization, for uncivilized na- 
tions have none. 



ALPHONSE DESJARDINS 95 

The iiLimerous building and loan societies of Massachusetts, 
together with its large and prosperous so-called "cooperative 
banks," are doing much good in their way, but they restrict 
their activity to one particular class of transactions, namely, 
the purchasing of a home by the laborer. "Why not, as the 
progressive state of Massachusetts has done, provide for all 
the various wants of the farmer as well as of the workingmen? 
Such wants cannot be denied in face of the large business done 
by private money lenders and usurers generally, in spite of 
stringent laws. Why not adopt an organization that will put 
at the disposal of the people part of their own savings instead 
of utilizing them only or mainly for the advantage of large 
undertakings, while the wealth producers are entirely left to 
the tender mercy of the sharks? 

Farmers and Workmen Unprotected in Financial Circles 

Anyone who studies the existing financial fabric on this con- 
tinent, seeing, as he cannot fail to do, the almost helpless sit- 
uation in which the farmers and workingmen are practically 
left so far as banking credit is concerned, will inevitably come 
to the conclusion that there is a missing link of a very great 
importance,' and that missing link is the cooperative bank 
above described. 

Such an organization Avould complete the financial mechan- 
ism by meeting in a systematic way, the wants of the masses 
of the population, who find themselves today with no organized 
means for satisfying their economic needs, if we except the 
item of home building. It would inculcate and stimulate the 
habit of making small savings ; it would educate — teach how 
capital can be formed gradually by mere cents, how it must 
be managed, safeguarded, multiplied by useful and provident 
employment; it would kill nsury; it would be an excellent 
feeder to the ordinary banks, as shown by the practical ex- 
perience of half a century; it Avould democratize finance, or- 
ganize credit, and transform the moral qualities into valuable 
assets; it would instill habits of foresight, of providence, and 
of punctuality in promptly paying a debt when due ; it would 
teach honesty, and bring to the man of industrious habits a 
higher reward than mere wages — the confidence of his fellow 



96 MARKETING AND FARM CREDITS " 

citizens; it wotild promote the spirit of local enterprise, and 
facilitate improvements of all kinds; finally, it would obviate 
the disasters attending panics, since everyone w^ould partici- 
pate in the management of affairs, through officers represent- 
ing the free choice of himself and his fellow members. 

Here again experience has shown that such a cooperative 
union has never been upset by a run; quite the contrary, be- 
cause such an institution is not practically owned by one or a 
few individuals possessing the largest number of shares, and 
thereby having the entire control by the multiplicity of votes 
based upon shares, but is open to all upon the basis of a per- 
fect equality, 

A conclusive experiment has been made on this continent, 
and the results obtained warrant the belief that such co- 
operative people's banks would be amply successful anywhere, 
provided there be a faithful adherence to the principles laid 
down. 

Pioneer Cooperative Credit on American Continent 

Levis is a small town of 7,000 inhabitants, situated on the 
shores of the St. Lawrence, opposite the old city of Quebec. 
Its population is mostly French Canadians and of the laboring 
classes. It was here that La Caisse Populaire de Levis was or- 
ganized on the 6th of December, 1900. It did not, however^ 
commence business until the 23rd of January, 1901. Besides 
the town proper, the enterprise included two neighboring 
parishes inhabited by farmers, which had been separated from 
the present town some years before without, however, inter- 
rupting the daily intercourse between these farmers and urban 
groups, so that everybody knew everybody else, as if all were 
still one unit. The object in including these outside parishes 
was to extend the experiment to a farming community in order 
to see how the institution would work among both classes. 

Started with not a cent in its cash box, the general assets 
of La Caisse Populaire de Levis were at the close almost of its 
sixteenth financial year, the 31st of October last, $526,111.29. 
The total amount of loans had reached $2,183,111.26, dis- 
tributed in 9,820 loans. 

The 1,250 members of this cooperative bank — the first of its 



ALPHONSE DESJARDINS 97 

kind on the continent of America — are proud to say that as 
yet not one cent has been lost through bad loans or mismanage- 
ment. The workingmen and farmers have chosen the manag- 
ing bodies, have alone provided the funds and it was to them 
that the money was loaned, their honor being in most cases 
the main security. The total turnover in these 15 years and 
11 months has reached the sum of $3,519,123.84, with gross 
profits amounting to $107,719.05, and a total of working ex- 
penses of $8,832. All that in spite of the competition, some- 
times very keen, of four branches of joint stock banks in Levis 
doing, apparently, very good business. 

The success of the Levis experiment has spread the idea 
throughout all French Canada and in less than five years 154 
other similar cooperative parish banks in as many different 
localities have been organized by me at the request of 
the local population desirous of benefiting by the advantages 
offered. Over 135 of these Canadian credit unions or Gaisses 
Populadres are working in exculsively rural parishes, and are 
doing most useful work both as savings and loan associations. 
Several of them have already reached a general turnover of 
well over $400,000 after only a few years of existence, not 
more than six years, and several less than six years. And fol- 
lowing up the example of Levis, none has yet lost one cent; a 
most striking fact indeed. 

This movement has spread over the frontier and several 
states of your great republic have passed legislation author- 
izing the organization of such credit unions. Among others 
one is proud to name the states of New York, Massachusetts, 
Wisconsin, North Carolina, etc. 

There is such a cooperative bank in Manchester, New Hamp- 
shire, among the French Canadian population working mostly 
in the cotton mills of that city. The general prospects are 
hopeful and promise abundant as well as most beneficial re- 
turns for the masses of the rural and working classes. 

Federal Farm Loan Act Defective 

A word now with reference to the recent federal legislation 
on farm and rural credit. The present Congress has moved in 
this matter by adopting a law having for its object the organ- 



98 MARKETING AND FARM CREDITS 

ization of a system of rural credit along somewhat new lines. 
It does not belong to my province to deal with the probable 
success or want of success in the future of this piece of legisla- 
tion, but I may be allowed to express doubts as to its adaptabil- 
ity to the needs and circumstances and, above all, to the lack 
of cooperative spirit and formation of the rural population. 
This education is and must be the result of untiring efforts and 
persistent practice, and must not be expected to be sown by 
a mere law. It has been the experience of Europe and so far, 
I may say that we have had to fight the same obstacle in Can- 
ada, people being accustomed to consider that new systems of 
credit in the same light as the banking credit, a very fatal 
error to start with. 

Of course, I sincerely believe that experience in the United 
States will show the defects of the newly created system and that 
the legislators will readily seek to remedy them as soon as dis- 
covered. I do believe most strenuously in the great principle 
of self-help, not having any faith in any state-aided system, 
believing, as I do, that the latter is more demoralizing than 
educative for the masses. 



LAND SETTLEMENT AND 
IMMIGRATION. 



LAND SETTLEMENT A PUBLIC QUESTION 

Elwood Mead* 

At no previous time in the history of this country have 
methods and policies of land settlement had the attention they 
are receiving today. The increasing price of farm land, the 
growing evil of farm tenancy, the stagnation in land settle- 
ment in the area now thinly peopled have all contributed to 
give new interest and importance to questions of land tenure 
and rural development. 

There is a growing belief that our national progress requires 
action which will broaden the opportunities of men of small 
capital to acquire farms and to do this Avithout being sub- 
jected to an economic pressure which would prevent the edu- 
cation of children or deny to farmers the same comforts of 
life now enjoyed by artisans in other great industries. To 
achieve this result land must be dealt with as something more 
than a form of property. It must be regarded as an instru- 
ment to be used in the manner calculated to give certain social 
and economic results. This may interfere with absolute owner- 
ship and cause the state to interfere with an ownership which, 
holds land out of use, or which uses it in such a way as to pre- 
vent proper development of community life. The single tax 
idea is an illustration; most of its supporters do not favor it 
as a form of taxation, but as an instrument for creating op- 
portunities similar to those which men had when a large part 
of the land belonged to the public. 

Agrarian Movement World-Wide 

Since the beginning of this century there has been an agra- 
rian movement Avhieh included some 30 of the foremost nations 



* Elwood Mead is professor of rural institutions in tlie University of 
California, and an economist of note. For a number of years he was 
in charge of development under the Closer Settlements Act of the Aus- 
tralian State of Victoria. He is especially prominent in irrigation cir- 
cles. 



102 MARKETING AND FARM CREDITS 

of the world. 

Under this movement the government buys, subdivides and 
sells land on conditions which enable poor men to earn out of 
the soil the money needed to pay for it. These the government 
further assist by carrying out under proper recognized direc- 
tion, the improvements necessary to make these farms habit- 
able and productive. 

In this way men who would otherwise be compelled to livo 
lives of economic misery have been helped up into a broader 
and more generous life based on landed independence. 

In these countries the state is aiding settlers because of a 
belief that the best results in agriculture and the most con- 
tented and patriotic people are found where farmers own their 
own homes and the land they cultivate; that, on the other 
hand, non-resident ownership and tenant farming are politi- 
cally dangerous and socially undesirable; that the cultiva- 
tion of great estates by ignorant farm labor is also bad. In 
order, therefore, to promote national efficiency, maintain the 
balance between city and country life those countries have 
made state aid and direction in land settlement a public pol- 
icy. 

f Thus far American governments, state or federal, have not 
recognized the need for such action and as a result the sub- 
division of land, the character of the settlers sought, the price 
charged for land and the conditions of purchase have, on priv- 
ptely owned land, been left to unregulated private enterprise. 
On public land there has been no scrutiny of settlers or careful 
inquiry into their capital, experience and purposes to make 
certain that they would be capable farmers or that they were 
properly prepared to cope with the obstacles ahead of them. 
In too many instances the selfish desires of land owners or col- 
onization agents have had more weight than the vital needs 
of the eager land seekers. Too often the settler has not been 
looked upon as a human being, but as a check book. His place 
in the scheme of things was to foot the bills; he was to pay 
for land, for irrigation works and the profits of promotion. 
How he was to do this was his own affair. 

During the past 15 years much of this movement to pro- 
mote settlement has been speculative, some of it dishonest. 



EL.W0OD MEAD 103 

Florida swamps and western deserts have absorbed altogether 
too much of the savings of wage earners to M^hom the distant 
hills were greenest. 

The Innumerable Procession of "Home Suckers" 

^/Attracted by lurid advertising, many have bought without 
investigation. A long procession has sought Eldorados in the 
West and South. Few were rich, but the majority of families 
had from $1,000 to $5,000, which was more than they could 
afford to lose because it had been earned by long years of sav- 
ing. A year or two later a considerable number of these same 
land seekers drifted back where they started from with no 
money at all. They had gone to new sections with little 
knowledge of local conditions; with only a hazy idea of the 
cost of irrigating western land or draining southern swamps 
and often with small knowledge of farming. Those who have 
visited the homes of these settlers, and have seen their priva- 
tions and futile endeavors feel that there is something wrong 
with our settlement methods and policies, but few have real- 
ized how far they are wrong or what is the particular fault. ' / 

Closer Settlement of Irrigable Public Land 

That obscurity, so far as the West is concerned, no longer 
exists. We now see plainly that to clear, level, and prepare 
land for irrigation; to build houses, fences and do all the 
things needed to convert arid land into a farm capable of pro- 
ducing a living income, costs more per acre than it does to 
buy improved farms in the Atlantic states. We now realize 
that nothing could be more wasteful of time and money than 
to leave each settler to work alone without aid or direction 
in making these improvements; that organization and skilled 
management are as necessary in leveling land, building houses 
and barns as in constructing canals and reservoirs. It is also 
plain that to let inexperienced, over-sanguine men invest all 
their capital in an undertaking known to those in charge to 
be extra hazardous is not only unkind but morally indefensi- 
l)le. That, however, is what has taken place and it has been 
tolerated and sustained by the civic pride of localities which 



104 MARKETING AND FARM CREDITS 

longed for growth no matter what it cost outsiders. It is to 
the interest of those who own land and those who desire to 
own it that a different spirit should shape future land colon- 
ization. 

Because the West more than any other section has much to 
gain from efficient and economical land settlement, this sec- 
tion has in the last two years given serious attention to its 
problems. Three commissions have studied conditions in 
western colonies. All have reported that there is need for 
public aid and control both in the preparation of farms and 
in the selection of settlers. Some of the reasons for these con- 
clusions are given in one report describing conditions which 
confront settlers on irrigable public land. 

''Aside from the main irrigation canals and the un- 
formed dirt roads they will find that everything re- 
quired to transform a desert into productive farms 
. remains to be done. The land must be cleared of 
brush, the farm must be fenced, a house for the fam- 
ily and a stable for the work animals must be built, 
and provisions made for a water supply for house- 
hold use. Not being familiar with local conditions, 
they will not be able to buy to advantage, and they 
will be under pressure to buy quickly. Many will be 
victimized with poor horses and bad cows. The credit 
extended by local stores is paid for in excessive prices. 
In one colony settlers were paying $27 a thousand feet 
for lumber that was being bought in ' quantities by 
cash customers for $11 a thousand feet. 

"If settlement should be rapid, they would be un- 
able to procure cows or horses locally. Many of the 
animals now on the project have been shipped nearly 
1,000 miles. This adds greatly to the cost of equip- 
ment. Cows bought for $65 cost the settlers over 
$100 each. 

"Until a house is built the settler's family has- 
either to live in a tent or board in town. Illness often 
results ; heavy living expenses, delay in beginning pro- 
ductive employment contribute to make settlers' fam- 
ilies homesick and discouraged. Often the prepara- 



ELWOOD MEAD 105 

tory work prevents planting a crop the lirst season, 
and the settler finds his meager capital swallowed up 
in living expenses before he can obtain any return 
from the land. Before he can grow a crop his land 
must be leveled for irrigation. To do this well re- 
quires knack and experience. Lacking these, money 
and time may be wasted and the final results be so un- 
satisfactory that the work will have to be done over 
again. Few settlers can afford to buy the special 
equipment for leveling land cheaply, especially on 
small farm units. 

"In exceptional cases the cost of leveling land has. 
reached $100 an acre. It will average $25 an acre. 
To leave this costly preparatory work to be done by 
the settler Avho lacks experience, teams, implements 
and practical skill involves a ruinous waste of money 
and time. Nothing could be more inefficient. Careful 
consideration should, in addition, be given to making 
land ready for the application of water as an essential 
part of reclamation. 

"The use of proper equipment, directed by practi- 
cal knowledge and skill, in preparing the land would 
be as advantageous as it is to have irrigation works 
built by skilled engineers, and the acreage cost is 
nearly as great. 

"The average area of farm units will be somewhere 
between 40 and 80 acres. If we assume on all 
reclamation projects an average of 60 acres, it will 
require over 10,000 houses to shelter the settlers on 
all vacant land. If each settler is left to buy his build- 
ing material at retail, make his own design for the 
house and hire the carpenters as they can be secured, 
the following results will be inevitable: 

"The cost of material will be 50 per cent above 
what will be paid if these houses are built under 
some central direction, with the material bought at 
wholesale for cash. 

"There will be many freak houses, lacking durabil- 
ity and comfort and detracting from the appearance 



106 MARKETING AND FARM CRJEDITS' 

of the district, where under a comprehensive scheme 
all will be sanitary and comfortable and can be attrac- 
tive. 

' ' The time of settlers, which ought to be taken up 
with the farm work, will be given over to bargain- 
ing for material, hunting for a builder, and doing 
things that a properly organized central office could 
attend to more effectively at one-tenth the cost. Ten 
thousand houses and an equal number of barns to 
shelter work will cost $15,000,000, if any attention is 
given to durability and comfort. A saving of 50 
per cent in value to settlers from having this done 
under competent direction will enable many to suc- 
ceed who otherwise fail. 

' ' The applicants for these lands, as a rule, will be men 
of small capital. Men who have money enough to buy 
improved farms prefer to do this rather than undergo 
the risks and hardships of reclaiming desert land and 
living in remote, sparsely settled districts. Experi- 
ence has shown that to make the farms on some 
projects ready for cultivation and pay for the water 
right will cost about $150 an acre. The following es- 
timate is regarded as a fair average for an 80 acre 
farm : 
Leveling land, building checks and small 

ditches ^ $2,500 

House and barn 1,500 

"Work team and tools 1,000 

Living expenses — one year 500 

Taxes, operation and maintenance — charges 

and incidental 300 

Initial payment on water right 200 

Dairy herd of 20 cows, or other live stock 

to eat fodder crops 2,000 

Total $8,000 

"To this must be added the ultimate cost of a water 
right, which will be between $40 and $50 an acre." 
Many settlers who are willing to face hardships and self 



BLWOOD MEAD 107 

denial have sought to ignore the cost of equipment or at least 
to start with less than is needed. Part of the land is left un- 
leveled. The dairy herd is cut down. The cost of the house 
is reduced, but these reductions mean smaller income. They 
do not make for either comfort or efficiency. 

Sometimes the settler can borrow money locally, but always 
at a high rate of interest. Sometimes there is no surplus of 
funds in the local bank. When it comes to borrowing from a 
distance the security cannot be considered satisfactory, for un- 
til improved and equipped the income from the farm is small 
and uncertain. 

On one western project where 440 settlers are now working 
hard and probably will succeed, 580 have given up and gone 
away. This percentage of failures is too great. The waste of 
money, hope and labor is a tragedy. One cannot honestly en- 
courage settlement under such conditions. 

Closer Settlement of Privately Owned Land 

When we come to consider the settlement of privately owned 
land there is little diiference between the problems of the cen- 
tral and western sections of the country, except in the fact that 
great landed estates of the West afford a broader field for the 
introduction of a better system. Everywhere, from Ohio to the 
Pacific coast, the high price of la'sdrls^Saaidng its purchase so 
difficult that real farmers of small capital are either accepting 
farm tenantry as a permanent condition or are looking to 
other lands for homes. * Farm land is going into the possession 
of non-resident city capitalists who are content with a low rate 
of interest and who do nothing to uplift the social life of the 
communities where their farms are located. That in turn is 
creating a shifting rural population with less interest in com- 
munity welfare, with poorer country schools, poorer churches, 
less conveniences in homes, more unpainted houses, gates and 
barns. 

We cannot ignore these tendencies toward rural decadence 
and with easy going indifference allow our farmers to become 
a rack rented peasantry. We cannot leave the conditions un- 
der which poor men buy land to be fixed wholly by the owner. 
In other words, we must begin to regard land settlement and 



108 MARKETING AND FARM CREDITS 

the maintenance of the right conditions of tenure of farm lands 
ap a public matter. In giving effect to a policy of this kind we 
do not have to make any experiments or break new trails. We 
have examples of what can be done and how to do it in Ireland, 
Denmark, Norway, Sweden, Germany, Russia, six Australian 
states and New Zealand. These countries have made it possi- 
ble for any farmer who is frugal and industrious to own the 
land he cultivates. The reasons which influenced Germany 
have been well stated in a recent report. They support witk 
equal force the adoption of such a system in the United States^ 
"Colonization has been made a public matter," says 
this report, "because when it was a priA'^ate matter 
persons bought land without having funds to pay for 
it, only to make a profit by selling it again at the first 
opportunity. Unprincipled middlemen persuaded 
owners to part with their lauds and other profes- 
sional subdividers of land have sometimes unscrupu- 
lously dismembered holdings with an utter disregard 
for economics and the consequence has been a con- 
tinual increase in the price of land. 

" . . . "While every other country exerted itself 
to the utmost to strengthen and augment its agricul- 
tural resources by increasing and elevating its rural 
population, it cannot be considered encouraging that in 
Eastern Germany there are vast territories almost 
wholly in the hands of a few landed proprietors. The 
existence of such large landed estates not only hinders 
the natural progress of the peasant class, but, greatest 
evil of all, it is the principal cause of the diminished 
population of many territories because the working 
classes, finding no chances of moral or economic im- 
provement, are driven to emigrate to the great cities 
and manufacturing districts. Scientific researches 
also prove that small farms now-a-days are more 
profitable than large, above all, small livestock im- 
proved farms, the importance of which for the nutri- 
ment of the people is constantly increasing." 
Land settlement was not dealt with as a public matter in the- 
countries above referred to until it became manifest that non- 



ELWOOD MEAD 109 

resident ownership and tenant cultivatoi's are dangerous 
sources of social and political unrest. In Europe the peasant 
who wanted to own his own farm was leaving for other coun- 
tries where land was cheap and the conditions of purchase 
favorable. So many of those who remained were restless and 
discontented that some means of enabling them to own their 
homes became essential to national efficiency, if not national 
preservation. 

In Ireland the purchase of landed estates and subdividing 
and selling to tenants was forced on the government as the 
only means of stopping ruinous emigration and dangerous po- 
litical agitation. In Denmark it was taken up to provide for 
the surplus farm population and to prevent a costly exodus 
to other countries. In Central Italy discontent with tenant con- 
ditions on feudal estates had caused large areas to be practi- 
cally depopulated. Cattle were being pastured where land was 
formerly intensively cultivated. 

The result has been the evolution of a system, which, while 
it varies somewhat in detail, has certain essential features com- 
mon to all these countries. 

Small Initial Payments 

The first of these essentials is a provision for enabling 
farmers to enter into possession of land with only a nominal 
payment, thus leaving the greater part of their capital avail- 
able to pay for improvements and equipment. 

Organized Construction of Farm Improvements 

The second is the creation of an organization, either state 
or private, to make the necessary improvements such as houses, 
stables, etc., leveling and ditching irrigated land and provid- 
ing practical superintendence over the farming operations of 
beginners to prevent costly delays and mistakes. 

Long Time Payments for Land and Improvements 

The third is making the period of payments long enough to 
enable the money to be earned out of the soil, and having the 
payments amortized, that is, in small amounts paid annually 



110 MARKETING AND FARM CREDITS ' 

or semi-auniially rather than in a lump sum ; also securing for 
the settler, usually through the use of the state's credit, loans 
of money needed for improvements at low rates of interest. 

Practical Advice and Oversight for Beginners 

The fourth is the employment of capable business men fully 
informed regarding prices of farm equipment and farming 
operations in the locality to give advice to inexperienced be- 
ginners or farmers from other sections of the country who do 
not know what crops to plant or when or how they should be 
cultivated. 

This local director of a colony can be of great service in 
bringing about cooperative arrangements in buying and sell- 
ing. It is part of his duty to watch the operations of colonists 
and to be able to advise those responsible for extending credit 
who among the colonists are industrious and trying to succeed 
and who are idle and impractical. This oversight is an essen- 
tial feature of any system which gives generous personal credit. 
This state aided settlement has everywhere been remarkably 
successful. Inaugurated to enable men who had industry and 
thrift, and little else, to become landowners, but with the pre- 
diction at the outset that it would entail heavy costs to the tax 
payers, the conditions of payment have been so well adjusted 
to the profits of agriculture that in nearly all countries it has 
been self-supporting and in some cases has earned a profit. 
While doing this, it has revolutionized rural conditions. The 
statements of the commission from British Columbia which 
studied its results in New Zealand could be made of all the 
countries where state aid in land settlement has been adopted. 
The language of the commission is as follows : 

"With money available on terms suitable to the in- 
dustry, the farmers have built better houses or remod- 
eled their old ones; brought a large acreage of land 
under cultivation that would otherwise be lying idle ; 
have bought and kept better livestock; have bought 
and used more labor-saving machinery on the farms 
and in the houses; have erected elevated tanks and 
windmills; have piped water to their dwellings and 
to their outbuildings; have irrigation for their vege- 



ELWOOD MEAD HI 

tables aud flower gardens around the houses; and have 
increased their dairy herds. They keep more sheep 
and pigs and have so largely increased the revenue 
from their farms that they are able to meet the pay- 
ments on the mortgages and to adopt a higher stand- 
ard of living, and a better one. Throughout the coun- 
try a higher and better civilization is gradually being 
evolved ; the young men and women who are growing 
up are happy and contented to remain at home on the 
farms, and find ample time and opportunity for rec- 
reation and entertainment of a kind more wholesome 
and elevating than can be obtained in the cities." 

Plans in California and Wyoming 

The California State Colonization Commission has recom- 
mended the adoption by the state of something akin to the Aus- 
tralian system. The board in Wyoming has recommended that 
arid public land be dealt with as follows : 

"First: That this development be undertaken by 
the federal and state authorities in cooperation. To 
accomplish this, we further urge the passage of appro- 
priate legislation, both by congress and state. 

"Second: That the federal government construct 
and operate the irrigation systems under the provi- 
sions of the United States Reclamation Act. 

"Third: That the state direct the sub-division, sale 
and settlement of the land, inaugurating a system of 
financial aid and practical advice to the settlers, in- 
cluding loans for essential farm improvements at low 
rates of interest with long time amortized payments. 

"Fourth: That the whole development be planned 
in advance so as to insure everything required for 
complete aud harmonious community life; including 
the provision of homes for farm laborers, farm units 
of varying sizes, and plans for towns, roads and 
schools. " 

In considering the need for state action in this country it 
has to be remembered that our farmers come from widely dif- 



112 MARKETING AND FARM CREDITS 

:ferent localities. They are of diverse nationalities. Naturally 
inclined to be distrustful of each other, they will not, at the 
outset, form cooperative organizations, but will be greatly 
helped by the practical oversight and direction of government 
officers. Such an influence operating at the outset will do much 
to create a community spirit and lead in time to confidence and 
cooperation, desirable thingis which have slow growth under 
present methods and policies. 

This is one of the questions which cannot be solved by being 
ignored. It cannot be solved by what is vaguely called cooper- 
ation of the farmers themselves. The tenants who want to own 
farms do not know each other. They do not know where to 
buy to the best advantage. They lack money. They lack 
credit. And the cooperation of the people so situated only 
magnify their weaknesses. What they need is organized finan- 
cial aid and practical direction. The government, that is, 
either the state or federal government, is the only agency 
which can provide this effectively. It is the only factor which 
has the reserve resources and can insure continuity of action. 

Legislation to inaugurate such a far-reaching scheme as this 
cannot be expected at present. There must be a better under- 
standing of existing conditions and the need for action. The 
first step should be to secure the appointment of a congres- 
sional committee to investigate the subject and to have this 
committee authorized to employ a body of expert assistants 
who should be paid for carrying on independent inquiries in 
different parts of the country. "With this should go a cam- 
paign of education in what the agriculture of this country 
needs, and what ought to be done to meet these needs should 
be fully explained. 

This Conference can render the country an important serv- 
ice by arranging to have this subject brought to the attention 
of the present congress and using its influence to secure defin- 
ite action at the present session. 



E. DANA DURAND 113 



LAND SETTLEMENT IN THE NORTHERN 
STATES 

E. Dana Durand * 

At previous sessions of this Conference, considerable discus- 
sion has been given to the problem of credit in connection with 
the settlement of the arid and semi-arid regions of the West. 
The same problem arises in quite as serious a form with re- 
spect to those lands in the more humid states which are diffi.- 
cult to develop and require a large amount of expenditure for 
development as compared with the value of the raw lands. The 
states of Minnesota, Wisconsin and Michigan have enormous 
areas of such lands throughout their northern sections. Prob- 
ably in no other states in the Union is there so much good land, 
with abundant moisture, which is at present unutilized. 

Whereas in Iowa, a typical prairie state, more than four- 
fifths of the total land area consists of improved farm land (83 
per cent in 1910) the corresponding proportion for the three 
states mentioned is only from one-third to two-fifths (Minne- 
sota 38 per cent, Michigan 35 per cent, Wisconsin 34 per cent). 
The unused land in these lake states lies chiefly in their north- 
ern parts, the southern section of each being .Avell developed 
and with high prices for farm land. There are many counties 
in the northern parts of these states in which there is as yet 
almost no agricultural development, in which the improved 
land constitutes less than five per cent of the total area. Five 
of the largest counties in. Minnesota in 1910 reported less than 
one per cent of their area as improved farm land. While a 
considerable fraction of the unused land in these northern 
sections is not very Avell adapted to agriculture, there are mil- 
lions upon millions of acres which merely require improvement 
to make them fair, if not excellent farm land. 



* E. Dana Durand was formerly director of the Federal Census, and 
is now professor of Rural Economics in the University of Minnesota, 
University Farm, St. Paul, Minn. 



114 MARKETING AND FARM CREDITS ' 

Unused Lands Lift Cost of Living 

It is not only to the interest of these states themselves that 
this unused land, so far as it is suitable for agriculture, should 
be brought into use with reasonable promptness, but it is also 
highly desirable for the well-being of the country and of the 
world as a whole. The land which is easily developed in the 
United States has already been brought into use. Population 
has been increasing much more rapidly than the area devoted 
to agriculture and, since there has been comparatively little 
increase in yield per acre, agricultural production has failed 
to keep pace with population. The same condition appears to 
exist with respect to the world as a whole. This is in large 
part the explanation of the hig'h cost of living. The prices of 
farm products have advanced more rapidly than those of other 
products. The world needs more agricultural land as well as 
more efficient use of the land already cultivated. 

Why is it that land of reasonable fertility and supplied with 
abundant moisture remains out of cultivation in such states as 
Minnesota, Wisconsin and Michigan? 

As nearly as one can ascertain the difficulties of bringing 
much of this unused land into cultivation are scarcely greater 
than those which confronted the pioneers in such formerly 
forested states as New York, Ohio, Kentucky and much of In- 
diana. Some of the land in these northern sections no doubt 
is more difficult to improve but for much of it the labor and 
capital required is not excessive. 

More inducement, however, is needed to lead men to engage 
in pioneer work now than formerly. A century or even half 
a century ago scarcely any other career than farming was open 
for the young man born in this country or for the immigrant. 
The hardships of developing new lands were taken as a mat- 
ter of course. Nowadays opportunities for employment in the 
cities, as well as their social and other attractions, draw many 
young men away from even favorable conditions in the devel- 
oped farm regions, to say nothing of keeping them from going 
to new regions where the development of farms is laborious 
and slow. Equally difficult is it to induce city dwellers to go 
into farming, particularly where the initial conditions present 



E. DANIA DURAND 115 

any measure of hardship. ]\Ien with capital sufficient properly 
to develop such lands as those of Northern Minnesota, Wiscon- 
sin and Michigan comparatively seldom go there at present. 
Those without capital too often fail to make a success, or are 
able to make progress only with extreme slowness. 

Under these conditions it seems appropriate that the states 
and the Nation should do all that is in their power to make it 
easier for the settler in new agricultural regions. Measures 
that perhaps could not be justified if designed merely to bene- 
fit those directly concerned, may be justified by the importance 
to the whole public of extending our agricultural area. 

What Hinders Development 

The chief physical hindrances to agricultural development 
in the northern sections of the three states under considera- 
tion are (1) the forests and stumps, (2) the swamps and (3) the 
stones. The degree to which any one of these hindrances is 
present varies widely in different parts and even within short 
distances. In some cases all three obstacles to cultivation are 
present in the same area in such measure as to render agri- 
cultural development very difficult. There are some lands in 
Northern Minnesota, for example, which, though well suited 
to agriculture, cost from $100 to $200 per acre to put into con- 
dition for cultivation. In other eases the cost is far less, though 
for the bulk of the land the cost of improvement is materially 
greater than the present market value of the raw land. 

Most of the forests which have to be removed in order to 
permit agricultural use of land in these regions contain tim- 
ber of little value at the present time. The white pine and 
other valuable timber has for the most part been cut ; the pine 
especially being witnessed only by the big', tough, unrotting 
stumps which are one of the greatest obstacles to cultivation. 
There remain inferior trees of original or second growth. In 
a good many cases, the timber on the land would be worth 
enough to cover the cost of removing it, sometimes much more, 
were there convenient access to market. But as it is, the bulk 
of it brings little or nothing to the settler. However, the timber 
is increasing in value, and one of the important problems is that 
of getting as much as possible out of it. 



116 MARKETING AND FARM CREDITS 

The swamp land area in these northern states, especially in 
Minnesota, is great. Most of the swamp lands were conveyed 
by the federal government to the states more than half a cen- 
tury ago. The states have given much of this to railroads or 
otherwise disposed of it, but in Minnesota at any rate the state 
still owns a large quantity of swamp land. Much of this swamp 
land is very satisfactory for agriculture if properly drained. 
The states and the counties have undertaken many large drain- 
age enterprises but not always wisely. In some cases the land 
drained is not very w^ell adapted to agriculture and in other 
cases the drainage projects have been undertaken too long in 
advance of the demand for use of the land. 

The construction of the main ditches which the governmental 
enterprises provide for represents usually much less cost than 
that of the local ditches and tile drains which are required 
on the individual farm. Settlers too often do this work of 
local drainage very poorly. 

Problem of The Peat Lands 

One peculiar problem appears in these northern regions — 
that of peat soils. Minnesota has several million acres of land 
covered with peat. Such soil lacks necessary mineral elements. 
With methods known at present, too much expenditure seems 
to be necessary to make deep peat produce good crops. The pro- 
per drainage of such lands is also a difficult problem. The first 
need with respect to peat lands is a thorough scientific experi- 
ment as to the best methods of draining and using them. 

Preparation of Land Before Settlement 

As already state'd, comparatively few of the settlers who 
have come to the northern regions of Minnesota, "Wisconsin 
and Michigan, have had enough capital to enable them to do 
much at the outset in the way of preparing new land for cul- 
tivation. Since very seldom is any preparation of the land 
made by the original seller, the man without capital usually 
cannot, for some years, raise enough from his land to support 
his family, to say nothing of paying for improvements. A 
large proportion of the settlers find it necessary to work off 



E. DANA DURAND " 117 

from the land — in the timber camps or the mines, or on the 
roads, drainage enterprises and the like — much of the time 
during their first few years. The development of their land 
goes on but slowly and often is not well done. 

It is desirable either that a reasonable proportion of each 
tract of land offered to settlers should be improved in advance 
of sale, or that such credit should be made available for the 
settler that he can borrow the money to improve a reasonable 
fraction of his land at the outset. The former method is per- 
haps preferable because the settler is apt, from lack of ex- 
perience and facilities, to improve his land less economically 
and satisfactorih\ 

Importance of Community Settlement 

One of the greatest difficulties confronting the settlers in 
this region is the absence of community life. The settlers are 
undul}^ scattered. The temptation is to pick out a piece of land 
which is relativel}^ easy to develop or which has superior soil, 
without regard to the distance from other settlers, from rail- 
roads and from markets. Where settlers are thus scattered, it 
Ls impossible to provide satisfactory roads for them to reach 
their neighbors or the market towns. There is not apt to be 
enough of any one product raised in a given locality to justify 
the provision of satisfactory marketing facilities. Thus, while 
dairying appears to be the branch of farming to which most of 
Northern Minnesota is best adapted, the sparseness of settle- 
ment makes it impossible, for the most part, to maintain local 
creameries, and the farmers have to put up with the much 
inferior method of making butter on the farm. The absence 
of a community again largely prevents mutual help among 
the settlers in their tasks of clearing, erecting buildings, and 
producing crops. It makes it difficult to maintain good schools 
and difficult for the children to reach the schools that do exist. 
It preA^ents the development of any considerable measure of 
social life. 

One of the essentials of public policy with respect to land 
settlement is the promotion of community settlement. In the 
states under discussion practically nothing has been done by 
federal or state governments to promote this metliod of settle- 



118 MARKETING AND FARM CREDITS 

ment and comparatively little has been done by private initia- 
tive. 

The problems of land settlement cannot of course wholly be 
solved by legislation. The states and nation are, however, in a 
position to do something toward bettering conditions. 

Topographical and Soil Surveys Are Needed 

The first thing that is desirable in such a region as Northern 
Minnesota is a thorough survey of the land. Broad and gen- 
eral topographical and geological surveys have been made, but 
far more detailed surveys are needed. In the conduct of such 
surveys not only engineers and geologists should participate, 
but also soil experts, forestry experts and agricultural econo- 
mists. 

Such a survey would serve in the first place to determine 
which lands are satisfactory for agriculture and which would 
be better left permanently in forests. Much of the land in these 
northern regions is too rough, rocky and stony to be well suited 
for agriculture. Moreover, forests are needed both to supply 
timber products and to regulate stream fiow. It would not be 
appropriate at this time to discuss the proper policy with re- 
spect to the lands which are deemed most adaptable to forest 
purposes. 

It should be noted further that a great deal of land, while 
ultimately no doubt desirable for agriculture, has now upon 
it partly grown timber which should be allowed to ripen. 
When there is so much land with no timber or on which the 
timber will never become of much value, it is an economic 
waste to cut down trees which* when they become larger or 
when markets become more accessible, will have a very con- 
siderable value. 

Such a detailed land survey, moreover, is necessary to de- 
termine the proper character of drainage enterprises, both 
public and private. It would serve further as a guide to de- 
termine which sections can best be developed first, whether 
from the standpoint of quality of soil and ease of preparing 
it for use, or from tha,t of accessibility to means of transporta- 
tion and markets. It would help to determine the proper 



E. DANA DURAND 119 

methods of clearing forests and removing stones as well as 
the proper methods of agricultural use after development. In- 
cidentally it would also do much to prevent the virtual decep- 
tion and fraud upon settlers, which now so often occurs. 

Need of Policies for Public Lands 

A second broad aspect of governmental policy with respect 
to these undeveloped lands has to do with the lands still owned 
b}' the federal government or by the states. In Northern 
Minnesota approximately a million acres of land are still 
owned by the federal government and more than two million 
by the state. It can scarcely be said that there has been any 
reasoned policy with reference to the disposal of these lands. 
Even though the federal land polie}^ may have been satisfac- 
tory with respect to the prairie lands or the lands easily devel- 
oped, it is obviously unwise to apply precisely the same policy 
to lands that require extensive drainage or difficult clearing. 

^lost of the federal lands in Minnesota are swamp lands. 
Under the Volstead act, applying only to federal lands in Min- 
nesota, the federal government permits the state and the coun- 
ties at their own discretion to construct drainage enterprises 
which affect those lands. The federal lands are assessed for 
their share of the cost of ditches. The federal government 
does not pay these assessments, and when they consequently 
become delinquent the act provides for turning the lands over 
to the counties for sale. The counties are permitted to sell 
them only to persons qualified as homesteaders under the gen- 
eral federal laws, and must account to the federal government 
for the minimum price of the land, $1.25 an acre. This entire 
policy, in my judgment, is unsatisfactor}''. It amounts to turn- 
ing over federal lands, not to the state, which might conceiv- 
ably adopt a rational policy in marketing them, but to the in- 
dividual counties which can scarcely be expected to pursue 
such a policy. 

The State of Minnesota, also — and I believe the same is true 
cf most other states which received land from the federal gov- 
ernment — has hitherto lacked any carefully planned policy as 
regards the settlement of state lands, especially those which 
require difficult clearing or other improvement. In Minnesota 



120 MARKETING AND FARM CREDITS - 

the sale of public lands is in the charge of the state auditor, 
whose many other functions prevent him from giving carefui 
study either to the general problem or to the particular ques- 
tions which constantly arise. No special attempt has been 
made to see that the lands sold by the state get into the hands 
of those who wish actually to use them. While liberal credit 
has been granted for the price of the land, nothing has been 
done to prepare it for the settler, or to help the settler improve 
it. The state has done almost nothing to promote commun- 
ity settlement upon the lands which it has sold. Scattered 
small tracts have often been offered for sale when it would have 
been possible to withhold from sale all but a limited area of 
more or less contiguous lands, and thereby to foster the de- 
velopment of true agricultural communities. 

Fortunately, the people of Minnesota have just adopted a 
constitutional amendment which will permit a wiser policy 
with respect to the state lands. A revolving fund has been 
created which may be used for draining or clearing lands 
owned by the state or for construction of roads along them. The 
cost of such improvements is to be recouped through the en- 
hanced value of the land. One of the most important tasks 
before the legislature this winter is to formulate legislation 
for wisely carrying out this constitutional amendment. Such 
legislation should be so framed as to insure so far as possible 
the success of the settler. If the state adopts an efficient pol- 
icy under this amendment, its example will, it is to be hoped, 
lead many of the large private land owners to pursue similar 
methods. 

Essentials of State Land Policy 

The essential features of the policy which should be adopted 
by Minnesota under this constitutional amendment seem to be : 
1. The clearing or drainage of a sufficient propor- 
tion of each tract of land sold to permit the reason- 
ably efficient settler to earn a modest living on the 
farm from the outset. It is not desirable that the en- 
tire tract should be improved, as this would involve 
loo great an extension of state credit, and as it is 



E. DANA DURAND 121 

doubtful -whethei' the cost -would be as low where the 
improvement is done all at one time as where it is 
done gradually by the settler. It would perhaps b© 
wise to permit settlers to contract to improve their own 
land, receive pay from the state for the work at the 
outset, and later to repay the state. This would amount 
to lending the settler money for improvement. It may 
not be permissible under the wording of the constitu- 
tional amendment. 

2. The granting of adequate credit for the cost of 
such improvement. At present an,y one who buys state 
land is required to pay 15 per cent of the price in cash 
and is given 40 years at four per cent interest in which 
to pay the balance, with no requirement of gradual 
amortization. If credit is given for the cost of im- 
provements, there should be a requirement for gradual 
repaying of the principal, though perhaps during the 
first few years no such payment should be demanded. 

3. Such selection of the lands to be improved and 
sold as shall best promote agricultural development. 
The lands on which the settler is most likely to suc- 
ceed should of course be developed first — the condi- 
tions of success being judged not merely by the char- 
acter of the land and of the obstacles to cultivation 
but by the situation with reference to markets and 
means of transportation. In particular the policy of 
community settlement should be pursued as far as 
practicable. 

4. Sale of state lands, whether previously improved 
or not, only to bona fide settlers who will undertake ' 
to bring it into actual use for agriculture. 

Relation of Credit to Land Question 

The third great line of public policy with respect to the 
unsettled area of such states as Michigan, Wisconsin and Min- 
nesota, has to do with credit, apart from the credit which may 
be granted to the settler on state lands. It is evident from 
what has already been said that the credit problem is pecu- 
liarly difficult for the settler in a region of this character. In 



122 MARKETING AND FARM CREDITS 

a prairie country the value of land itself constitutes a large 
part of the value of an operating farm. The settler can bor- 
row on his land a considerable fraction of his total invest- 
ment. Moreover, men who already possess considerable cap- 
ital are more likely to go to a prairie country than to one 
where the preparation of the land is difficult. In a country 
where forests, stumps, stones and swamps must be conquered^ 
the settler cannot borrow on his land more than a small frac- 
tion of the cost of the developed farm. The cost of clearing 
and otherwise preparing the land for cultivation usually 
much exceeds the price of the raw land. 

A large proportion of the settlers in these northern regions, 
buy the land itself largely on credit. Private settlers as well 
as the state are usually liberal in this respect. The settler may 
give a first mortgage, in which case under existing conditions 
it is difficult for him thereafter to borrow more money on the 
land, even though its value be enhanced by improvements, un- 
til the mortgage falls due. In many cases the settlers take . 
land under contract of sale, the title remaining in the seller. 
Under this practice they seldom can borrow anything more 
on the security of the land. The total need for credit is far 
from being supplied by even the most liberal terms as to the 
purchase price of the raw land. 

Federal Farm Loan Act Fails to Meet Needs of Settlers 

The new federal rural credits act will accomplish compara- 
tively little for the settlers in such a region as Northern Min- 
nesota. The strict limitation of the amount of the loan under 
that law to 50 per cent of the value of the land and 20 per cent 
of the value of improvements, prevents it from meeting the need 
for a large measure of credit. It is to be feared also that the 
requirement that the local farm loan associations shall comprise 
borrowers desiring at least $20,000 of loans will be a hindrance 
to the success of the law in a thinly settled region where the 
individual settlers are not in a position to borrow more than 
very small amounts. The area which a single association would 
have to cover in order to meet this requirement would be so 
large as to prevent that personal acquaintance and contact 



E. DANA DURAND 123 

which is necessary to the success of an organization, especially 
one involving some measure of mutual liability. 

Further Credit Aid Needed 

It remains for the federal government, or the states, there- 
fore, to consider other means of furnishing credit to new set- 
tlers in such a region as that under consideration. The indus- 
trious and capable settler should be able to borrow a large pro- 
portion of the value of his land and improvements. As from 
time to time more land is cleared or otherwise improved, the set- 
tler should be in a position to borrow more for still further 
improvement. He needs long time loans with gradual amortiza- 
tion. He may need to be relieved of principal payments during 
the first few years of settlement. Of course he needs a moder- 
ate rate of interest. 

These requirements are not easy to meet. It is not, of course, 
possible to provide credit for the man who does not deserve it. 
It is not possible to provide credit for developing land which is 
incapable of earning the means of paying interest and principal. 
In view, however, of the fact that in a new region such as this, 
if land settlement is properly conducted, land values tend rap- 
idly to rise with the growth of population and the improvement 
of the lands, it should be feasible to furnish a large measure of 
credit under favorable terms without serious risk of loss. Due 
care must, of course, be exercised with respect to the character 
of the settlers to whom loans are made. Careful study of the 
character and capabilities of the land is necessary. Unless set- 
tlement is conducted in a rational manner, so that the settlers 
are likely to succeed, the lender takes undue risk. A proper 
credit policy is bound up with a proper policy with respect to 
all other features of land settlement. 

It is not my purpose to suggest precise means for furnishing 
more satisfactory credit facilities to new settlers. It may be 
found that some form of state loans furnishes the only solution. 
Perhaps something can be accomplished through associations of 
borrowers, with unlimited mutual liability, though this system 
is less feasible in a newly settled country w^here the farmers are 
strangers to one another than in an older region. It may be 
that private capital, particularly that of local investors, who are 



124 MARKETING AND FARM CREDITS 

interested in the general develcpment of the region, can be in- 
duced, under proper state supervision, to furnish a greater 
measure of credit. The subject is one which such states as jMin- 
nesota should carefully study, I am inclined to believe that 
state, rather than federal legislation, will best serve the purpose 
of providing that upper fringe of credit which is needed for the 
new settler. 

How to Regulate Commercial Sales of Land 

Finally, a proper public policy with respect to land settle- 
ment will exercise some measure of influence and control over 
private land holders who have lands to sell. Immense quanti- 
ties of land in Northern Minnesota, Wisconsin and Michigan 
are held by a comparatively small number of persons or con- 
cerns. In the early days timber companies acquired — sometimes 
by rather devious means — great holdings primarily for the sake 
of the timber. In many cases they still hold the cut-over land. 
Some railroad companies still have large tracts derived from 
federal or state grants. 

I shall not discuss here the question of the legal or moral 
rights of these large land holders or the problem of the unearned 
increment of land. Without any radical interference with what 
are commonly considered private rights, large land holders 
might be influenced to pursue a policy better calculated to pro- 
mote agricultural development than that which they usually'' 
pursue. In fact, a policy beneficial to the public interest would 
probably serve also the private interests of such land holders. 

If large land holders would adopt such policies with refer- 
ence to the preparation of their land for sale, the granting of 
credit for improvement, and the promotion of community set- 
tlement as have been suggested as desirable with respect to state 
lands, they could do even more than the states in promoting 
the development of the lands of these northern regions. It may 
be that the pursuit of such policies could be furthered by per- 
mitting and encouraging large land holders to pool their lands. 
It often happens that a number of large holders together pos- 
sess the greater part of the land in a given locality, and yet that 
these holdings are so divided and intermingled that no one 



HECTOR MACPHERSON 125 

holder alone can economically prepare land for sale and elTi- 
ciently promote community settlement. The formation of col- 
onization companies, in which the present land holders should 
become the controlling stock holders and to which they should 
turn over their lands, would prove advantageous in many cases. 
It may be that less can he accomplished through permissive or 
regulatory legislation with regard to large land holdings than 
through the influence of public opinion. Education and agita- 
tion with reference to the proper policy to be pursued by the 
owners would have much influence upon them. 

Regulating Land Advertising 

One thing the state can and should do with regard to private 
holders of undeveloped lands : As far as possible they should be 
prevented from misrepresenting lands which they offer for sale. 
It is not merely an injury to the individual buyer of land that 
he should be deceived regarding its value and capabilities; it is 
an injury to the general public in that it ultimately retards or 
prevents effective agricultural development. While doubtless the 
majority of land holders and land agents are honest, misrepre- 
sentation is still too common. A man unfamiliar with the pecu- 
liar conditions and difficulties confronting the settler in a new 
region may easily be deceived both as to the character of the land 
and the difficulties of bringing it into use. 

It has too often been the policy of our states to seek indis- 
criminately to induce immigrants to come to the lands of the 
state. Boosting methods have prevailed. State authorities them- 
selves have misrepresented conditions. They have thought 
chiefly of the numbers that could be induced to come in from year 
to year rather than of the success of the settlers and the extent to 
which real agricultural development was secured. So-called 
state immigration bureaus and other state authorities that have 
to do with land settlement, whether of the state's own lands or 
of privately owned lands, owe it to the settler and to the state 
as a whole to tell the truth, to refrain from exaggeration, to set 
forth clearly the difficulties confronting the settler, to promote 
first the settlement of those lands that are most easily usable, 
to guide and aid the settler in every way possible. 



126 MARKETING AND FARM CREDITS 

It is high time that the federal government and the states 
adopted a broad and comprehensive policy — perhaps a policy 
that from some standards would be considered somewhat pa- 
ternalistic — with respect to the settlement of the inferior lands 
of the country and of the lands which are more difficult to bring 
into cultivation. There has hitherto been an almost complete lack 
of study of the subject. There has been little that could be 
called a reasoned policy. The problem is one of the biggest con- 
fronting the American people. 



A NEW POLICY OF LAND SETTLEMENTS FOR 
THE PACIFIC NORTHWEST 

Hector Macpheeson * 

From time immemorial the human animal has been pushing 
out for elbow room and exploring new territories in his strug- 
gle for existence. From the period when the Phoenician trader 
was groping westward through the Mediterranean and up around 
the coast of Western Europe, to be followed by the Greeks, the 
Eomans, the traders of the Italian cities, and the Mohammedan 
Moors, there has been a pressing of civilization westward. 

In every case, we find that the bearers of the torch of civil- 
ization have been the adventurous elements of the races. The 
hardy Phoenician traders, the Greek merchants, the navigators 
of the Italian cities, the IMoorish warriors, were the bearers of 
civilization westward from its cradle in the East, until by the 
year 1492, the principal achievements of civilization had been 
fairly well disseminated throughout the western world. 

With the year 1492 and the discovery of America, there was 
opened up a great new field for the adventurous and imaginative 
explorer and settler. From the nations of Europe, — Spain, 
France, England, Holland and Sweden, — came colonies that en- 
tered upon the task of exploring and settling the new world. 
These formed the foundations of our first American stock. They 
were finally dominated by the settlements of English who 



* Prof. Hector McPherson of Corvallis, Oregon, is in charge of the 
work in marketing and rural organization conducted by the federal 
government and the Oregon Agricultural College. 



HECTOR MACPHERSON 127 

formed the basis of the original 13 colonies, whicli set up the 
standard of independence. 

Since the Revolutionary war our country has been a happy 
hunting ground for the adventurous spirits of all Western Eu- 
rope. They have piled themselves upon our eastern shores only 
to begin the trek westward and northwestward in search of 
iidventure, seeking for new lands to till and new fields for eco- 
nomic gain. In the Pacific Northwest this westward migration 
which has been pushing on throughout the ages, has finally come 
to the end of its course. The wanderers can proceed no further 
westward, and must retrace their steps or settle down to over- 
■coming the obstacles of homemaking amidst arid plains, swampy 
tidelands, or logged-off timber lands. Or if they have the means 
they may buy a home from the improved lands of pioneers. 

The Unsettled. Lands of the Pacific Northwest 

It is in the far Northwest that the most considerable bodies of 
unsettled tillable lands remain in this countrj^ "We have Wash- 
ington with an area of 42,000,000 acres, of which less than 
■6,500,000 are improved farm lands; Oregon with 61,000,000 
acres and 4,250,000 acres in improved farm lands; Idaho, 
53,000,000 acres and 2,750,000 acres in improved farm lands; 
Montana with 3,000,000 acres and 3,500,000 acres improved. 

Of these vast areas much to be sure will never be cultivated. 
But in all of these states there are areas of tillable lands still 
unclaimed and still undeveloped, which are as large as many 
•eastern states. To take my own state of Oregon as illustrating 
the situation, we have approximately 80 per ceni, or 16,420,- 
422 acres of our tillable farm land still uncultivated. We have 
still unimproved lands in the state open to homestead entry ag- 
gregating 16,000,000 acres. This, as has been pointed out 
by President W. J. Kerr of the Oregon Agricultural College, 
in a recent hearing before the Federal Farm Loan Board, is 
about equal in area to the entire improved lands of the state of 
Indiana. 

We have many counties in the Northwest as large as many 
eastern states. Harney county, Oregon, for example, has an 
area of 9,936 square miles, the State of Maryland 9,941; i\Ial- 
heur count}^, Oregon, an area of 9,884 square miles, Vermont, 



128 MARKETING AND FARM CREDITS 

9,124; Crook county, 7,778 square miles. New Jersey, 7,514- 
Klamath county, 5,999 square miles, Connecticut, 4,820; Doug- 
las county, 4,922 square miles, Delaware 1,965. 

Many of these counties have arable lands still uncultivated^ 
equalling the entire cultivated areas in many of these older 
eastern states. Again illustrating from Oregon, there is an es- 
timated 3,299,514 acres of arable lands never yet cultivated in, 
Harney county, Avhile the entire state of Maryland has but 
3,354,767 acres under cultivation. Malheur county has 2,633,- 
487 acres tillable but uncultivated lands, while the state of 
Maine has 2,360,657 acres under cultivation. Crook county has 
1,428,218 acres susceptible to cultivation but unused, while New" 
Jersey has 1,803,336 acres of tilled farm lands. Lake county 
has 1,423,836 acres of land which may be tilled, while Vermont 
is cultivating 1,633,965 acres. A careful analysis of farm land 
conditions in other northwestern stages will show similar large- 
areas waiting for settlement, and the question arises, "Whjr 
have they not been taken up and made into homes ? " 

Why They Are Not Settled 

In order to ans^wer this question it is necessary to examine- 
the character of these agricultural lands, which have never yet 
been brought under cultivation. Koughly speaking, they may 
be classified under the following heads: (a) Eich lands, occu- 
pied in farms but sparsely settled and uneconomically utilized j. 
(b) Arid lands, which are susceptible to irrigation; (c) Semi- 
arid or arid lands, which may be cultivated by dry farming- 
methods or used for pasture; (d) Swamp, wet and overflowed 
lands; (e) Logged-off lands. 

The bare enumeration of these various classes of land goes- 
a long Avay toAvard explaining Avhy they have not yet been 
taken up. Those of us who have been familiar Avitli the sweep 
of the American frontier across the continent, until by 1880, 
the census could declare that the frontier had entirely disap- 
peared, are apt to marvel at the slowness of settlement in the 
Pacific NorthAvest. "We must remember, however, that the vast 
areas occupied during the first three-quarters of the nineteenth 
century Avere comparatively easy to subdue. The great prairie 
regions supplied hay for the cutting, game for the stalking, 



HECTOR MACPHERSON 129 

and abundant crops were the response to even the most care- 
less cultivation. They were taken up and tilled largely by 
those who were ready to subsist for as long a period as might 
be necessary, by the self-sutficient type' of agriculture. Food, 
clothing, shelter and even to some extent implements and 
household furnishings were wrested directly from nature. The 
struggle for existence was rigorous, but supplied a rough but 
M'holesome means of subsistence. These conditions, however, 
cannot be duplicated on the unsettled lands of the Pacific 
Northwest. 

In the first place, the self-sufficing type of settler is now 
practically an extinct species. Commercial agriculture with 
the greater comfort and convenience it affords has driven the 
self-sufficing type from the field, and Avith its passing the abil- 
ity of the new settler to enter the wild, barehanded and make 
himself a home has become a thing of the past. 

Then, too, the lands which are still to be settled are of a 
vastly different character from those over which the frontier 
pushed its rapid course. Our best lands in the Pacific North- 
west were early settled on the old donation claim plan, whereby 
large areas came into the possession of single families. Al- 
though the old donation claim lines are largely obliterated the 
lands are for the most part still held in farms altogether too 
large to be handled efficiently. Yet they are held at prices 
which make it practically impossible for the new settler with 
little capital to buy them, pay for them and make a living in 
the process. The arid lands require large amounts of capital 
to bring them under irrigation. Until this has been accom- 
plished the settler cannot exist. Our semi-arid dry-farming 
lands must be cultivated in large areas by the extensive method. 
This again takes expensive equipment, and large amounts of 
capital in order to get started. Our swamp and tidelands with 
the most fertile soil in the world must be diked and drained by 
an expensive process. Our logged-off lands require an amount 
of capital and labor to bring them under cultivation which 
staggers the imagination of the easterner who has been ac- 
customed to his little trees and easily rotted stumps. Under 
these conditions, experience has demonstrated that the old 



130 MARKETING AND FARM CREDITS • 

easy methods of land settlement fail utterly, when we come to 
the Pacific Northwest. 

Past Methods of Land Settlement 

But as the figures quoted above have indicated, the far North- 
west already has considerable areas of land under cultivation. 
Let us examine briefly the methods by which these lands have 
been settled, and ask ourselves whether or not they have been 
adequate to our needs"? 

The outstanding characteristic of New World colonization 
policies has been the desire to attract settlers. This has been 
true to a large extent of the United States as well as of the 
several commonwealths. It has been even more conspicuous in 
the colonization policies of railroad companies, of commercial 
clubs, colony promoters and real estate firms. 

In general it may be maintained that this policy has been a 
commendable one. To achieve progress along any line, popu- 
lation must not be too sparse ; and our most difficult problem 
in winning a continent from nature has been the attracting of 
sufficient workers to subdue it to the uses of man. 

Under the early movement of settlement across the conti- 
nent the dominant desire to attract settlers could result in lit- 
tle or no harm. Each settler became a self-supporting unit in 
the community. But under the conditions noted in the Pacific 
Northwest, great evils have resulted from faulty methods of 
land settlement. 

National and State Policies 

With the passage of the Preemption Act in 1841 the federal 
government definitely foresook the policy of using the public 
domain as a source of revenue and began a permanent policy 
of land settlement. This policy found more complete expres- 
sion in the Homestead Act of 1862 and may be traced through 
the series of acts following, including the Timber Culture Act 
of 1873, the Desert Land Act of 1877, the act providing for 
segregation of reservoirs 1888, the Carey Act of 1894, and the 
Eeclamation Act of 1902. The NortliAvestern states also have 
taken a hand in legislation calculated to promote the settle- 
ment of the various types of laud enumerated above. 



HECTOR MACPHERSON 131 

liut up to the present time, we must admit botli state and 
federal policies for the promotion of the settlement of irri- 
gated lands have fallen far short of expectations in the Pacific 
Northwest. Without doubt, a few very successful projects 
liave been settled under the Carey and Reclamation Acts. But 
even here, we have few or no safeguards to protect the settler 
from the numerous pit-falls that beset his path in making him- 
self a home on a new project. 

Despite state and national regulation, projects developed 
under the Carey and Reclamation Acts have sometimes failed, 
leaving considerable communities of settlers stranded in the 
desert. Hundreds of other settlers have been attracted to 
these projects through advertisements of promoters and com- 
mercial clubs, only to be bitterly disappointed in the results 
attainable from the lands purchased. 

In many instances individuals or companies have exploited 
the land that has been irrigated greatly to the detriment of 
the settlers. In one instance which has come under our ob- 
servation, one individual owned more than half of the land ir- 
rigated under a federal reclamation project. He formed a 
company to exploit the land in which he himself was the major 
shareholder. But the exploiter not being afforded sufficient 
protection by the formation of this company, had a new com- 
pany formed which was made the sole agent of the first com- 
pany in the sale of its lands, the second company being a mere 
figure-head to take the blame of misrepresentation and other 
abuses connected with the sale of the land. This land was . 
started at $50 an acre and has been raised repeatedly until a 
figure of $250 per acre has been reached in some cases, and 
this in addition to the charges for water made under the Rec- 
lamation Act. Little wonder that after 10 years of operation 
the project is not over one-third under cultivation. 

In several instances state aid has been granted either inde- 
pendently or in cooperation with Carey Act and Reclamation 
Act projects to bring lands under irrigation. In many cases, 
hoAvever, we are again faced with a situation in which the 
main responsibility for obtaining the legislation rested upon 
land owners in the projects to be irrigated who hoped to reap 
their reward by the exploitation of prospective settlers. 



132 MARKETING AND FARM CREDITS 

Railroad Policies 

The railroad company is interested in land settlement from 
two points of view. In the first place it may have lands to sell 
and be anxious to dispose of them on the best conditions pos- 
sible. But its prime interest in getting the land settled is to 
create business for the railroad which runs through the lands. 
It wants prosperous farms capable of producing tonnage from 
which it expects to reap its profits. Consequently some of our 
best settlement work has been done under the efforts of rail- 
road companies. In some cases, however, there have been 
abuses connected with the dependence of our state and national 
government upon the railroads for land settlement. There 
have been instances in which the road hoped to profit more 
from the increasing value of the lands than it could by having 
the lands sold and settled at a lower valuation. The railroads 
have been among the worst offenders, too, in putting out 
grossly exaggerated literature to attract settlers. 

Promoters, Commercial Clubs and Real Estate Firms 

By far the greatest amount of injustice in land settlement 
has resulted from the efforts of promoters, real estate firms 
and commercial clubs. The colony promoter has probably 
done more to discredit the Pacific Northwest than all other in- 
fluences combined. His method of operation has been to se- 
cure a block of low-priced land, break it up into smaller tracts 
and sell it as fruit or nut orchard tracts, truck-gardening 
farms or poultry ranches. Having chosen his specialty he gets 
out a prospectus of the colony, employs expert help to write 
up its possibilities and of course claims that the best results 
recorded anywhere in the state will be easily attained on his 
project and proceeds to sell the lands to innocent professional 
and business men throughout the East. 

The commercial clubs of the Northwest are composed of 
business men who are mainly interested in having the country 
settled with a view to increasing the business of their re- 
spective localities. The real estate firms differ from the colony 
promoters in that they usually sell lands for others on a com- 
mission basis. They themselves may be members of the local 



HECTOR MACPHERSON 133 

commercial club, or of a colony promotion company in their 
immediate neighborhood. On the face of it, however, their 
business is legitimate, and while their commissions may be ex- 
cessive in many cases, under present conditions, they form a 
necessary link between buyers and sellers of real estate. 

The most fundamental criticism which must be made of all 
these agencies in land settlement, with the possible exception 
of the federal government, is that of exaggeration. AVhile the 
federal government has on the whole tried to be impartial in 
its representations, it has in some instances been almost forced 
into exaggeration in self-defense. That is, certain projects 
have been undertaken under the Reclamation and Carey Acts 
which were, to put it mildly, premature, and have necessitated 
able defense in an attempt to justify them. But the great evil 
has resulted* from the taking by promoters, commercial clubs, 
and real estate firms of disconnected statements from federal 
reports, and the utterances of United States Reclamation Serv- 
ice officials, and playing them up in such a light as to deceive 
the prospective settler. 

The use of statements connected with the name of "the 
United States government," "the United States Reclama- 
tion Service," and the names of the "prominent engineers and 
officials in that service," has done much toward deceiving set- 
tlers into expectations which were beyond the possibility of 
realization. 

The Fruits of Misrepresentation 

The whole system is conducive to the production of evil re- 
sults which it takes at least a generation to eradicate. Mis- 
representation as to costs of getting started leads to settlers 
attempting to establish themselves with too little capital. The 
result in many cases is disastrous and settlers are compelled 
to abandon their homes having lost everything they possessed. 
In many cases the settlers are overcharged for the lands they 
acquired to an extent which weakens the whole community 
financially, and makes progress exceedingly difficult. But 
there exist thousands of cases under private promotion schemes 
resulting in still greater evil. The operations of the "gold 
brick" and "lightning rod" men of earlier days were inno- 



134 MARKETING AND FARM CREDITS 

cent, if not praiseworthy, by comparison. Orchard tracts have 
been laid out on lands utterly incapable of producing fruit, 
nut groves on bleak hillsides where no one but Jack Frost has 
a chance of reaping the harvest. Hard working families have 
come westward expecting to find a veritable garden of Eden 
awaiting them, only to find that their possessions would hardly 
maintain a family of jack rabbits or sagebrush rats. 

Under such a combination of circumstances development has 
been slow, social institutions meager and inefficient, and set- 
tlers discontented. 

The Time Ripe for a Change 

As never before the entire Northwest is becoming aroused 
to the necessity of a complete change of land settlement pol- 
icy. Greater care is being exercised in the information sent 
out for the benefit of settlers by departments of state, and the 
commercial clubs themselves, where they are not dominated by 
the promoter, are recognizing that satisfied, prosperous settlers 
form the only safe basis on which to build up a community. 
Since agriculture is the most important industry in these North- 
western states it is being recognized that the amount of farm 
products and not the number of real estate deals, forms the 
decisive criterion of progress and prosperit3^ Even realty men 
are talking of enforcing moderation and justice for their 
patrons. 

To him who is able to read the signs of the times, it would 
appear that the time is ripe throughout the Northwest for the 
establishment of a constructive and enlightened land settle- 
ment policy, and we turn briefly to a consideration of the ques- 
tion as to what such a policy should include. 

Denmark's Lessons 

In the old world we can learn from such a comitry as Den- 
mark, which has staked its national stability and prosperity 
upon the establishment of the small independent farmer. In 
order to bring about a wide distribution of land ownership the 
government has loaned a large amount of money to individuals 
desiring to purchase small farms. In 1913 about 6,000 of these 



HECTOR MACPHERSON 135 

small farms had been established, the government loaning 
90 per cent of the valuation of the farm to be repaid over 
a long period of years on the amortization plan with three per 
cent interest. 

Ireland and Her Land Policy 

Ireland, to take another illustration, had for generations 
been developing the most ignorant, ambitiousless, shiftless 
peasantry to be found anywhere in Europe. The British gov- 
ernment finally awoke to a realization of the conditions which 
had resulted from a combination of the ravages of famine, the 
abuses of absentee landlordism, and its own misgovernment, 
and began to cast about for a remedy. The result was the es- 
tablishment of a system whereby the government supplied 
credit to the tenants, enabling them to purchase their holdings 
from the landlords who w^ere under compulsion to sell. As a 
result, Ireland is being transformed into a country of independ- 
ent land-owning small farmers. Already are to be seen the 
signs of prosperity and the magic touch of land-ownership. 

New Zealand and Australian Policies 

But it is to the newer countries like New Zealand and the 
Australian states that we must go for lessons in settlement 
which should apply most nearly to our Pacific Northwests 
Their problems are similar to ours. They had abundant re- 
sources and large areas of agricultural land, but lacked both 
capital and settlers for their development. The government 
set itself the task of attracting settlers, supplying them with 
capital and setting them to work scientifically in the develop- 
ment of those resources. The plan has worked out admirably 
and affords valuable suggestions for the American states under 
consideration. 

Let us briefly consider the last settlement program of Vic- 
toria as affording an illustration of the most progressive type 
of state legislation. By its Advances to Settlers and Closer 
Settlements Acts, this province has gone a long way toward 
eliminating hardship and privation from the process of settling 
its land. By the former act it has secured funds on the credit 
of the state and reloaned them to settlers for developmental 



136 MARKETING AND FARM CREDITS 

and productive purposes at 4i/^ per cent per annum; the loan 
being payable in a long term of years upon the amortization 
plan. 

By the latter act, it has taken hold of its arid lauds and de- 
veloped them in a way which has eliminated practically all of 
the features that have lead to the condemnation of our Amer- 
ican policies as failures. In the first place the private specu- 
lator is eliminated by the government's taking over the lands 
to be irrigated. Then the irrigation system is established and 
the lands divided up into small farms of 40 to 80 acres 
each. These farms are then sold to settlers at the actual cost 
to the government of the lands and their recalmation. In fact 
the Closer Settlements Board will go farther than this. It will 
level the land, place the water on it, seed a proportion of it 
to alfalfa, put up suitable farm buildings, and even purchase 
cows under the supervision of a dairy expert to be placed on 
the land. The settler may thus take possession of his farm 
and find it in shape to return an income almost from the start. 
The following paragraphs taken from the Australian Year 
Book of 1914 give sufficient detail for our purpose : 

(IV) Closer Settlement in the Irrigated Districts. 
The movement for closer settlement in the irrigated 
districts started about four years ago. The state had 
expended between three and four million pounds on 
irrigation works, which were not being used to their 
full extent. Under the Goulburn Scheme, the largest 
of the state works, more than half the available water 
was being wasted. The reason was lack of people to 
cultivate the land as irrigation requires. Previously, 
in the various districts the average size of farms va- 
ried from 400 to 600 acres, while under irrigation from 
20 to 80 acres will now give employment to a good- 
sized family and furnish them a comfortable liv- 
ing. The large farms of the irrigation districts could 
not be properly cultivated by their owners, and the 
only way to make irrigation a success was to subdivide 
these holdings and bring in farmers to cultivate the 
smaller areas. To this end. the state offered to buy 
suitable land in anv district having a reliable and am- 



HECTOR MACPHERSON 137 

ipie water supply at a i>rice fixed by impartial expert 
valuers, and has now purchased about 111,000 acres 
for this purpose. This land is sold to settlers on 
311/2 years' term with 4i/^ per cent interest on deferred 
payments. These payments are calculated on the Credit 
Fonder basis and are equalized through the whole pe- 
riod. As a result, the settlers by paying an additional 
IV2 Psr cent, or 6 per cent in all, on the cost for 31% 
years pay off both principal and interest. To help the 
settler of small capital, the state will build him a house 
and give him 15 to 20 years to pay for it, will prepare 
a part of his area for irrigation and allow payments 
to be extended over 10 years. The cash payments re- 
quired are as follows : On houses costing less than £100, 
£10; from £l00 to £150, £15; while on houses costing 
more than cash payment varies from 12 to 30 per cent 
of the estimated cost. A cash payment of one-fifth the 
estimated cost of preparing land for irrigation is re- 
quired. The state also makes loans to settlers equal 
60 per cent of the value of permanent impi'ove- 
ments, these loans to be repaid in 20 years. Five 
per cent interest is charged on all advances — whether , 
for houses, preparing land, or money furnished the 
settler. In the past four years, 914 irrigated blocks, 
averaging 62 acres, have been taken by settlers of 
whom 835 were from oversea, chiefiy from Great 
Britain, and 579 were Australian. At Shepparton, 
one of the oldest of these settlements, there are now 
46 families with good houses, many young orchards, 
fine crops of lucerne and vegetables, where in Novem- 
ber, 1910, there was not a house, a family, or an acre of 
cultivated land. Under 3 years ago there were 27 
houses, in the Rochester district; now there are over 
230. In Tongala there are now 180 houses where 2 
years ago there were 30. 

Similar progress has been made in the other set- 
tlements. Houses being erected are of a better type 
than the original ones. This has been made possible 
because the settlers now applying have as a rule more 



Ic38 MARKETINa AND FARM CREDITS 

capital than the earlier ones and desire better homes. 
Here, then, we have the essentials of the sj^stem Avhich I am 
convinced is going to be adopted by the laud settlement policy 
of the fntnre in the Northwestern states. 

Distribution of Accurate Information 

The first essential is the distribution of accurate and un- 
biased information. There is nothing whatever to be gained 
in the long run by exaggeration and false reports concerning 
the lands of any sections of the country. But to secure the 
dissemination of accurate information there must be some cen- 
tral authority which will censor all literature sent out for the 
purpose of attracting settlers. This will mean that commer- 
cial clubs and chambers of commerce pamphlets, promoters' 
prospectuses, real estate catalogs and leaflets, and documents, 
issued by various state bodies must be subjected to some im- 
partial critic who is not dependent upon political favor for 
his office. Only by some such provision as this can we secure 
truthful dealing with those who are to be our future citizens. 

Eliminate the Promoter and Speculator 

The second essential is the complete elimination of the pro- 
moter, and laud speculator from all colonization projects. In 
the first place the promoter's method is an exceedingly costly 
one. It has frequently been costly from the standpoint of the 
promoter himself and vastly more so when the economic and 
social welfare of the community are taken into consideration. 

I have in mind a simple reclamation project by diking an 
area of overflowed land in which the promoter obtained the 
land and even constructed his dikes at a total cost of $60 
an acre. The project is being very slowly peopled at a cost of 
$200 an acre to the settler. There is no defensible reason why 
one man should be given the privilege of holding up an en- 
tire community by the collection of a toll as high as this. Had 
this project been handled directl}- by a state body similar to 
the Victorian Closer Settlements Board, it could have been 
reclaimed at lower cost in the first place and could have been 
sold to actual settlers at a reasonable value of say half what is 
now being charged, leaving the state reclamation fund a hand- 



HECTOR MACPHERSON 139 

some profit and at the same time securing contented and satis- 
fied settlers to fill up the project in a much shorter time. 

But the state must go farther than this. It must place rob- 
bery in the sale of land in the same category with bank, high- 
way, or train robbery. It is indeed more detrimental to the 
community than any of these. Most states have already en- 
acted laws against this tj'pe of exploitation. But up to the 
present time, the unprincipled promoter has usually found 
some method of evasion, and has left his baneful mark upon 
the community in spite of state vigilance. 

Credit by Government Aid 

The third essential of successful colonization is the provi- 
sion of credit upon terms which the settler can afford to pay 
without crippling the progress of the community. In this re- 
spect a long deferred step in the right direction has been ac- 
complished by the Federal Farm Loan Act. But those of us 
who are grappling with the problems of land settlement in the 
far Northwest realize that this is only a first step. We feel 
that it will accomplish comparatively little towards filling our 
great unsettled areas with prosperous homes. This is a field 
for state activity or joint effort between the state and federal 
governments. 

The State of Washington is introducing a bill providing that 
counties can take over lands, improve them, and allow the pur- 
chasing settler a long period of years in which to pay for them. 
To my mind this bill is not likely to prove more than moder- 
ately efficient. It is a matter which concerns the welfare of 
the whole state, and the larger the scale on which the land set- 
tlement business is carried on, the more economically it can 
be managed. This is true of all types of reclamation from the 
diking of our coast districts to keep out the Pacific, to the 
clearing of our large areas of cut-over timber lands. 

The State of Oregon has passed a rural credits bill which 
comes nearer to being on a par with the acts that have been 
transforming Australia for almost a quarter of a century than 
anything found in the United States. But it does not go far 
enough and will accomplish very little that could not be at- 
tained by the Federal Farm Loan Act. There are those of us 



140 MARKETING AND FARM CREDITS 

who hope that this bill can be amended, so as to make it pos- 
sible for any man of average thrift and industry to become 
the possessor of a farm home of his own. 

Selection of Risks 

Nothing could be greater folly than to extend government 
credit to every Tom, Dick and Harry who applies for assist- 
ance in obtaining a farm. It is just as foolish to suppose that 
all men who so desire can make successful farmers as it is to 
imagine that all who wish to play the piano can create har- 
monious sound. The board or commission in charge of land 
settlement should have sufficient experience back of it to be 
able to determine who among the applicants are most likely 
to succeed as farmers. Take this pamphlet, for example, with 
its title page inscribed, "From the Slavish Work of the Office 
and Factories to the Independent Life of the Farmer. ' ' There 
have been thousands of rude awakenings among men past mid- 
dle life, who have been enticed to try the "Independent Life 
of the Farmer," when they have found themselves confronted 
with the heartbreaking realities of life on western unim- 
proved lands. In Denmark the applicant for a small holding 
must show by his credentials that he is fitted to undertake the 
management and work upon the farm home which he desires 
to win. 

Instruction to Settlers 

But to provide accurate information on the productive value 
of lands and the financial assistance enabling the settler to get 
a fair start, is not enough to insure success. The further diffi- 
culty arises from the character of the lands to be settled. You 
cannot expect a new comer from the old world or from one of 
the Eastern or Middle Western states to come out and settle 
any one of the classes of land we have enumerated, without 
pretty definite instruction on questions of soils to be tilled, 
the crops adapted to them, drainage and irrigation problems 
and methods of cultivation. This type of instruction is being 
taken care of to some extent by our county agriculturists where 
these have been established. The state and federal govern- 



HECTOR MACPHERSON 141 

meuts should see to it that no county which is being developed 
as a state or federal drainage or irrigation project is without 
guidance. There should be not only the expert in irrigation 
engineering, but also the county agriculturist who is an au- 
thority in the production of crops under a system which is al- 
together foreign to most new settlers. 

Scientific Marketing 

Practically all of our new settlements are established for the 
purpose of carrying on commercial agriculture. The farmer 
must live largely by the receipts from the products which he 
grows and sells. The problems of marketing are usually more 
difficult in a new settlement where the regular agencies have 
not yet been developed. Hence it is necessary that the newly 
formed settlements be given every possible assistance in choos- 
ing their crops and grading, standardizing and marketing their 
products. In some of our newly settled irrigated districts in 
the Northwest the county agriculturists have been men capable 
of leadership in the organization of marketing associations,, 
and have also assisted the farmers in their efforts to specialize 
in commodities for which there is a ready sale. Some states, 
too, either through their agricultural colleges, or through spe- 
cially established departments of markets, are rendering val- 
uable assistance to the farmers of the state in the marketing 
of their crops. 

Centralized Authority 

Finally, in each of the Northwestern states the land settle- 
ment activity should be centralized in some body correspond- 
ing to the Closer Settlements Board of the Australian states 
and this board should be made responsible for the censorship 
of all literature sent out on the different settlement projects 
of the state. Thej'^ should also act as an impartial body 
through whom any prospective settler in any part of the world 
can obtain reliable information as to where he could find a lo- 
cation suited to his particular inclination, training and finan- 
cial condition. This land settlement board should compile 
lists of farms for sale and the prices at which they are held. 
It should secure dependable information on the character and 



142 MARKETING AND FARM CREDITS 

productivity of the soils; and, in short, it should constitute a 
bureau of dependable information through which prospective 
settlers may be fully informed; and through which the num- 
ber of misfits in our rural communities may be reduced to a 
minimum. For the best results, the board should have security 
of office for a term of years, and its work should be as com- 
pletely divorced from politics as possible. It should be given 
powers sufficiently broad to enable it to put into effect a set- 
tlement policy adapted to each of the types of idle land found 
in the NortliAvest. 

A Penalty on The Holder of Idle Land 

But when all this has been accomplished we still have the 
problem of our large holdings imperfectly cultivated, and 
held out of production at prices which no one can afford to 
pay. In a section like the Willamette valley, for example, 
this is our most serious problem. We have there a valley 150 
miles long and averaging 60 miles in width, that for fer- 
tility, beauty and climatic desirability, is unequalled anywhere 
on the face of the earth. Yet no one can pass through it with- 
out being bitterly disappointed at its general backwardness, 
and large stretches of waste land. 

Little wonder that Oregon has been made the battle ground 
for the Henry George theory of single tax. While I have no 
sympathy with single tax as it is promulgated by the leaders 
of our Oregon movement, I recognize that something must be 
done to wipe out the disgrace of our fertile yet idle l^nds. 
Whether it is to be a waste land tax, or a progressive land tax 
based on area, or single tax itself, I cannot say. But this prob- 
lem, which, while it is more acute in Oregon than elsewhere, 
is common to the other Northwestern states, has got to be solved 
before we can come into the heritage which our great undevel- 
oped agricultural resources should warrant us in expecting; 
and it would appear that any solution to be effective must penal- 
ize the holding of large areas of productive land in a nonpro- 
ductive condition. 

Let us then see how these policies should work out under 
'the land settlement conditions of our Pacific Northwest. 



HECTOR MACPHERSON 143 

Settlement of Logged-off Land 

One of the most serious land settlement probliems of the Pa- 
'cific slope is presented by what are known as logged-off lands. 
The term "logged-off" lands is applied to areas from which 
saleable timber has been removed, to burnt-over land, and in 
general, to all areas covered with timber products ' for which 
there is no market. It has been estimated that we have on the 
Pacific slope 23,000,000 acres which would make the best of 
;agricultural land if it were only cleared and prepared for cul- 
tivation, and that not less than 6,000,000 acres of this area 
are already in the condition of logged-off land. It is esti- 
mated that over 400 square miles are being added to this area 
per year by the lumber industry, and an equal acreage through 
forest fires. Other sections of the United States have also large 
areas in this condition. In its present condition most of this, 
land is absolutely useless. 

Most of this land is quite fertile and requires only clearing 
Tip to bring it into production. At present it is lying an abso- 
lute waste bearing a thick growth of underbrush which it has 
been estimated adds $4 to $6 a year to the cost of clearing. 

At the present time the disposal of the lands is left to the 
promoter who buys them from the timberman for perhaps $5 
an acre. He gets out attractive prospectuses showing farm 
homes on similar soils, dwelling at length on the fertility of 
the soil, the equable climate, and the crops that could be grown. 
He sells the lands in small tracts to the innocent newcomers 
at anywhere from $40 to $150 an acre in the rough. The man 
and his family beat out a few years of their lives grappling 
with the enormous growth of stumps and brush that has to be 
cleared, and usually sell out their possessions for a trifle to go 
elsewhere and begin life all over again. 

How to Improve Methods 

Now suppose we had an arrangement with the lumber com- 
panies whereby the state took possession of those logged-off 
lands immediately upon the removal of the merchantable tim- 
ber. A survey should follow the logging camp and all lands 
not suited to agriculture should be set aside for reforestation. 



144 MARKETING AND FARM CREDITS 

The lands adapted to agriculture could be burnt over at the 
proper- time and a pasture mixture sown in the ashes. This 
would convert them immediately into valuable pasture lands 
which could probably be rented to stock owners at prices 
which would yield the state interest on its investment. The 
lands could be divided up into- 40 to 80 acre tracts and 
enough of each tract cleared by the state to give the settler a 
crop area from the start. The state should then sell the farms 
to farmers whose credentials were acceptable to the land 
board and who were ready to invest a proportion, say a 
minimum of 25 per cent of the value of the land, in live- 
stock and equipment. The settler should be allowed to pay off 
this indebtedness to the state with low rates of. interest in 
amortization payments extending over a long period of years. 
With this pasture range, and say 20 acres cleared and un- 
der cultivation, the settler could build up for himself a good 
farm home within a comparatively short time, and our wilder- 
ness wastes would soon be transformed into prosperous rural 
communities. 

Under government control and supervision the clearing could 
be done on a large scale with specially constructed machinery 
and with powder either bought in large quantities or manu- 
factured in a state plant. A special arrangement could be 
made Avhereby the roads and bridges constructed by the lum- 
ber companies could be so directed as to form the first high- 
ways of the settlement. The burning squad could follow the 
logger, doing the work scientifically and at the right time, thus 
saving all the expense and effort which the accumulated 
growth of underbrush makes necessary. The timber interests, 
I have been assured, would gladl,y cooperate in a policy of this 
sort. Every farm home established in this way would mean 
an added market for lumber free from long, expensive freight 
hauls. Every field cultivated would mean cheaper and more 
wholesome food for the men in the mills and logging camps. 
In fact there is no good reason why all classes of citizens 
should not unite in a great movement to wipe out the disgrace 
of this enormous waste of our most valuable resource and at 
the same time reduce the surplus labor which creates our an- 
nual unemployed problem in all Pacific coast cities. 



MAX LOEB 145 

Under a sj^stem of state credit such as we have seen exists 
in A^ictoria, the settler would pay for his home while clearing 
up a part each year of his pasture land and finally emerge an 
independent holder free of debt. Under present methods we 
are getting nowhere, "We are attracting citizens through mis- 
representation, to a life which in its hardship and privation 
is a disgrace to our civilization. Instead of a desolate and 
useless waste, we ought to have upon our logged-off land areas 
the garden of this Northwest country. 

Dealing With Arid Lands Problem 

In a similar manner the other classes of unsettled lands 
should be dealt with. Arid lands should be irrigated only as 
there is an actual need for their settlement and with careful 
estimates of the character and productivity of the land as well 
as of the cost of constructing irrigation works and operating 
the system before the work of construction is undertaken. Wet 
and overflowed lands should also be reclaimed as state or state 
and national projects and should be settled by men who are 
given a fair chance to succeed at their chosen callings. At 
the same time our splendid areas of land which is cleared but 
only partly utilized should in some manner be forced into pro- 
ductivity. 

The keynote to the policy here advocated is social control. 
We now have government regulation of railroads, telegraph 
lines, and other semi-public utilities. It is my conviction that 
there is no utility in America affected with a greater public in- 
terest than the productive lands within our borders. It should 
be the purpose of our Nation and of every commonwealth to 
see to it that our agricultural resources are utilized to the full- 
est extent possible. Reactionary forces will cry paternalism, 
socialism, and hurl other damning epithets calculated to re- 
tard the movement. But in the end it will all be in vain. 

This program is as far as possible removed from socialism. 
It not only calculates the bringing of the fertile lands in the 
hands of as large a number of users as possible, but insists on 
giving them the fullest sense of ownership in their possession 
of the land they till. I do not care how expensive land becomes 
if it is only thoroughly utilized by as large a population as it 



146 MARKETING AND FARM CREDITS 

will accommodate. We find dairy farms in Holland and Swit- 
zerland that are worth $500 or $600 an acre. The farms are 
small and the population well distributed. You cannot find 
more loyal people or more conservative, yet progressive gov- 
ernments, anywhere in the world than are to be found in these 
small countries. Denmark is another illustration; Ireland, 
New Zealand, and the Australian states are still others. They 
have all reached the stage where the peopling of the soil by a 
progressive, thrifty, prosperous rural population has become 
a national policy scientifically promoted under government su- 
pervision. 



SUPERVISING COMMERCIAL COLONIZATION 

Max Loeb* 

There is probably no business which has been freer from 
governmental regulation than the sale of farms and farmlands. 
This business has been allowed in a very large manner to take 
its own sweet way without let or hindrance from federal or 
state government. There are, of course, some exceptions, such 
as the Kansas Blue Sky Law, which was later declared un- 
constitutional. 

There are still in this country large amounts of cheap, un- 
improved lands, awaiting the coming of the settler who is to 
make the present aridity bloom and blossom like the rose. 
In the northern states of Michigan, Minnesota and Wisconsin, 
there are at least 20,000,000 acres of land now covered with 
second growth timber, all of which v/ill some day come under 
cultivation — a condition of affairs in which both states and 
United States governments could aid actively if they were so 
minded. 

In addition, in the Dakotas and in Montana there are large 
stretches of prairie where the human species is almost a 
curiosity. Other sections are very sparsely settled. 



* Max Loeb of Chicago is a prominent land colonization agent, and 
a member of the board of education of Chicago. 



MAX LOEB 147 

Commercial Colonization Often Stupid 

The history of commercial colonization in this country is 
one of almost criminal stupidity. Many colonies have been 
attempted, most of them to meet with utter failure. Often the 
colonists have gone on the land utterly unprepared, without 
adequate capital, and as a result have left after a few short 
months of heartbreaking experience, benefiting neither them- 
selves nor the locality. Even the sellers of the land did not 
benefit, as the bad reports which the ill-fated colonists carried 
back to their friends in the cities was sufficient to give the 
locality a black eye for years to come. 

It is always easy to criticise existing methods. It is not 
so easy to offer constructive suggestions which will be of prac- 
tical benefit in regulating the farmland business in the United 
States. State immigration commissioners and bureaus have done 
good work in giving the would-be-farmer practical advice as 
to the amount of money needed and as to the best way to 
proceed. Unfortunately, the circulation of these documents is 
extremely limited, and often fails to reach the very ones who 
are most in need of accurate and helpful information. 

When it is a question of purchasing an improved farm, it 
is not so dangerous to trust the judgment of the individual. 
In the first place, the purchaser of such a farm generally is a 
man of some substance. The possession of $1,000 and upwards 
is, as a rule, an indication of some intelligence. It is not so 
difficult to make an estimate of the value of farm buildings, 
and conversation with the neighbors soon gives the prospective 
purchaser an idea of the fertility, and cash value of the farm's 
product. Information concerning soils can, in almost all states, 
be secured from the state capitol, at least, so far as the general 
section is concerned, and detailed information concerning the 
particular farm is usually available in the neighborhood. 

This is not true of unimproved sections, either in the prairie 
or out over land districts. 

Make Geological Surveys Available To Settlers 

This leads us to Suggestion Number 1, which, in the opinion 
of the writer, would make impossible the misrepresentation 



148 MARKETING AND FARM CREDITS 

concerning soils, often existing, and the inaccuracy which is 
so often present, even when there is no attempt at misrepresen- 
tation. Each state makes a geological survey of the land within 
its borders. The national government also has a large and 
well equipped soil survey staff. Why should not the work of 
these geological bureaus be carried further and each individual 
section of land or quarter section, if you please, given a definite 
soil certificate of character? Soils could be easily divided into 
classes. A party desiring to buy unimproved land is generally 
without very much money and without full information. If 
the state would say to him, "If you buy land in Section 2, 
Township so and so, Range so and so, you are buying land 
whose soil is of Grade A, B, or C," and then go on into detail 
as to what such soil consists of, what its merits are, what its 
demerits, and how best it can be handled, it would perform 
a highly useful service. 

In many sections of the country, soils vary in character 
greatly. Very rarely do you find a flat uniformity. A small 
charge could be made for this — say 25 cents — which would come 
very near covering the increased cost. This would obviate 
any misunderstanding, A state law could make it necessary 
for any person or firm selling land to furnish a soil certificate 
issued by the state, giving the details of the soil. Very soon 
purchasers of land will become accustomed to the presence of 
the certificate, and would insist upon getting same when they 
bought the land. The law could provide that in the Warranty 
Deed, after the legal description, the soil description (i. e. ac- 
cording to the state classification) be named. 

Of course, the question immediately arises: What consti- 
tutes an improved farm as distinguished from an unimproved 
piece of land? This distinction, however, is not difficult to 
determine. An arbitrary rule could be laid down that an 
improved farm is one on which a house and barn, costing not 
less than $250 together, has been erected, and on which at 
least $250 worth of other improvement has been made. In 
cases of doubt, the state immigration commissioner should be 
given authority to determine whether or not the improvements 
amount to $500. 



MAX LOEB 149 

The soil certificates should apply also to improved farms, 
although in the case of improved farms the necessity is not 
so great. 

Given such a system, each tract of land in the state would 
have a certain character of soil. The requirement of such a 
certificate would also enable the state land commissioner to 
get in touch with each purchaser and to place the buyer in 
touch with an authority who would, without self-interest, ad- 
vise him as to the manner of procedure, and how to spend his 
money with the end of getting the best results. 

Requirements For Northern Settlers 

The fate of the settler on unimproved land, whether it be in 
the unimproved sections of the North or in the prairies of the 
West, is subject to great perils, unless there be local coopera- 
tion. To take a concrete case — the writer is most familiar with 
Northern and North Central Wisconsin, where he has been 
engaged in selling farms and farmlands for the last 10 years. 
A settler going on cut-over land must have at least three 
elements in his favor. 

First, there must be a market for his wood products. 

This is the pulpwood, cordwood, kilnwood, bark, etc. 
Second, he must be able to purchase cows. (At least 

three cows are necessary for the barest livelihood.) 
Third, the settler should be able to get on credit 

from $100 to $200 worth of building materials, so that 

he can erect a habitation for his family to live in. 
Unless the colonization company either has made arrange- 
ments for the purchase of wood products and the sale of cows, 
etc., on credit or has insisted upon the purchaser having 
enough cash himself to purchase cows and put up 
rude buildings, it should not be allowed to make the 
sale. A sale to a man who has $50 or $100 and who goes on 
a piece of unimproved land expecting to make a success is 
almost doomed to failure. How can the man make good? As 
a general rule the man who purchases unimproved land only 
has a small amount of cash. 



150 MARKETING AND FARM CREDITS 

How To Provide Primary Needs 

Two ways are open to provide these facilities for the settler, 
both of which can be conducted so that there will be no loss 
or risk. One is for the county to itself sell to the settler the 
cows. This can be done without risk by taking security on the 
stock and providing that the purchaser shall pay one-half of 
his monthly cream check to the seller. In this way the debt 
is gradually amortized and at the end of a year or thereabouts 
the cows are the property of the settler, free from debt. Insur- 
ance can be taken on the stock to prevent loss in case of death. 

The facility of operation which is present in the sale of live- 
stock does not exist in the sale of material and the county could 
hardly be expected to go into this business, although it would 
be perfectly secured if it insisted up'on the money being expen- 
ded for buildings and supervised its expenditure. 

There is, however, a voluntary method, which, in the opinion 
of the writer, is superior to county aid. It is this : In counties 
where there is a large quantity of unimproved land, voluntary 
associations of farmers could be formed who would provide the 
new settlers with the cows and other materials, including even 
a team of horses and the few tools which are necessary to the 
beginner. 

Most farmers are interested, as a matter of self-interest, in 
the development of the counties in which their own farms or 
lands are located. New settlers make increased values. Every 
new settler helps the value of the surrounding land. Coopera- 
tive associations of farmers could sell to the new settler his 
cows and material for buildings, a team of horses and tools. 
These farmers, representing the prosperous and well estab- 
lished farmers of the community, could in turn borrow the 
money from the county, or the land bank, giving as security 
their own note and the security which they took from the new 
settler. 

If the farm journals would urge this plan of cooperative 
assistance, very soon such cooperative associations would 
spring up in the Northwest, aiding greatly the development 
of the locality. 



MAX LOEB 151 

Wisconsin now has a system of making loans for improve- 
ment of raw land and ditching of low land, but the j)rocedure 
is so imperfectly understood and the law is so cumbersome in 
operation that in only a few cases has any advantage been 
taken of the existing statute. 

Cooperation A Valuable Assistance 

Cooperative associations could exist extra-legally ; that is, 
without any aid from the state laws to the incoming settler. 
As far as a market for wood products is concerned, this is a 
matter of efficient local organization. A cooperative associa- 
tion could, through one of its officers, inform the settler as 
to the proper time to ship and names of purchasers for wood 
products. Or, the county organization could take the wood 
products from the settler and themselves dispose of them. 

In the prairie states of the Dakotas and Montana similar 
difficulties could be overcome in the same way. The farmers 
are now not making nearly enough use of the cooperative 
principle. In Wisconsin and Minnesota they complain of the 
slow development of unimproved lands, but do nothing prac- 
tical to accelerate that development. The new farm credits 
bill, while of great help to the solvent farmers, does little to 
relieve the difficulties of the insolvent farmer. The average 
purchaser of unimproved land is generally far from what might 
be called in a condition of solvency. 

The newcomer can not get credit at the local bank. Nor 
should it be expected of the bank to loan money on such long 
time as is necessary in the case of a newcomer. Credit asso- 
ciations can be formed, however, as suggested hitherto, which 
will perform the functions of a bank. The county organiza- 
tion, which would extend the aid to the new settler, should 
itself have power to go to the farmland banks and make loans. 
Take 20 farmers in an association which is making loans 
aggregating, say, $10,000 to the new settler. The note of 
these 20 farmers, secured by the security which they will take 
from the new settlers, should be good at the farmland bank 
and indeed, there is no risk in such a loan. 



152 MARKETING AND FARM CRiBDITS 

» Controlling The Advertising Of Farmlands 

This leads me to a third suggestion, equally vital and neces- 
sary, Statutes should govern closely the advertising of farm- 
lands. Exceptional crop yields should be given as exceptional 
crop yields and not stated as the average yield. The enthu- 
siasm of the salesman often leads to extravagant statements. 
Laws defining what is illegitimate and what is legitimate in 
farmland advertising will be of great value to the legitimate 
concern selling farms. Each county should be encouraged to 
get out literature of its own and compel the use of its litera- 
ture by every concern in selling farmlands in the territory. 

Frauds in the selling of land are no longer a frequent occur- 
rence, although some have been perpetrated within the last 
12 months. The Kansas Blue Sky Law has some valuable sug- 
gestions in this regard. There is no reason why a land com- 
pany should not be forced to satisfy the state authorities that 
its title is a good one before proceeding with the sale. Also 
the state should be satisfied that the company is of sufficient 
financial strength to carry out contracts into which it enters. 

Some of the states have enacted laws by which land clearing 
machines are rented to farmers at very reasonable rates, the 
machines being owned and operated by the state. The use of 
this plan should be extended. 

Wisconsin has a system (and Wisconsin, it may be said in 
passing, has perhaps gone farther to protect the farmers than 
any other state) which provides for an agricultural adviser 
whose salary and expenses are paid by the state. He has his 
habitat in the county seat of each of the northern counties, 
and gives his advice and assistance free of charge. His articles 
on farm subjects are gratefully received by the local papers and 
are widely read by the farmers. 

What Organizations Are Doing For Settlers 

Various projects have been launched, such as the National- 
Forward-To-The-Land-League of New York City, which pro- 
poses to make loans of $2,500 to would-be-farmers. Personally, 
the writer thinks this is too ambitious a project. At best only 
a small number can be helped, while the methods named above 



MAX LOBB 153 

can be of assistance and practical help to thousands of farmers. 

The International Harvester Company sells its implements on 
long terms to the farmers in the Dakotas and other states, 
taking security therefor. If the International Harvester Com- 
pany can do this and make a profit, why can not local organi- 
zations, not operating for profit, and with far less expense in 
•collection, sell cattle and building material and horses to the 
new settler? 

The Crosser Bill, which provides for a federal farm coloni- 
jzation board, and provides government aid for improvement 
projects, seems to me to go to the heart of the matter — to be 
a step in the right direction. The government has given great 
aid to irrigation projects in the far "West. It has given practi- 
cally no aid to the problem of improving the 20,000,000 acres 
of cut-over land in Wisconsin, Michigan and Minnesota and 
the 30,000,000 acres or more of undeveloped prairies in the 
Dakotas and Montana. 

Immigration and Land Settlement 

"When this war is over, it is a question of course, whether 
we will have increased immigration or whether the able-bodied 
citizens of Europe will be kept at home. But it is reasonable 
±0 suppose that within the five years following the war, there 
will be a considerable trend toward this country. How shall 
these immigrants be kept from settling in the congested cities? 
If the government gives to them a real opportunity on the 
unimproved lands, the prospect of going to the country will 
be rendered more attractive and the probabilities of settling 
them there greatly increased. Our homestead laws are efficient 
^nd thorough going, but until the settler can expect from the 
government a substantial measure of practical assistance— 
until he is given opportunity to purchase stock, tools, seed, etc., 
on terms which he may reasonably be expected to meet, home- 
steading will not be a satisfying success. 

It may be said that the land dealers are interested in the 
legislation suggested above and that it will help them to dis- 
pose of their lands. Possibly this is true, but it will also help 
the individual land owner to sell his lands. Furthermore if 
you throw about the sale of land the proper safeguards as 



154 MARKETING AND FARM CREDITS 

suggested above so that the interests of the purchaser are 
protected, any advantage which may accrue to him is a legiti- 
mate one. Legislation such as that suggested above will put 
out of business the illegitimate land concern which thrives 
on credulity and gullibility. It will make misrepresentation 
not only unprofitable, but highly dangerous. If cooperative 
associations are formed, there is nothing to prevent such a 
cooperative association from selling lands itself and thus enter- 
ing into competition with the commercial concern engaged in 
the sale of land for profit. 

The initial point of protection — ^when the buyer comes into 
possession of the farm, should not be neglected. Thousands 
of foreigners from the cities go into Upper Wisconsin, into 
Minnesota and into Upper Michigan every year. A few stick. 
Many return who, if they were given help when it was needed, 
would now be prosperous farmers. Thousands of acres in the 
Dakotas are neglected and unfilled because the buyer will not 
go to these districts barehanded and because he knows of no 
way in which to get assistance when he arrives. 

It may be said in criticism that the above is entirely on the 
assumption that the land buyer is without money. This objec- 
tion is without validity. The buyer of unimproved land has 
often a few hundred dollars. By the time he has paid the freight 
on his carload of goods, has paid the fare for himself and 
family, and has laid in a stock of groceries for a year (a highly 
necessary precaution on unimproved land) his little stock of 
capital is well nigh exhausted, and you have a discouraged 
farmer with no outlook ahead, ready to give up the ghost and 
go back to the city. To save this very useful rural citizen is 
well worthy of the attention of our commonwealths. 

I am not so familiar with conditions in the South, 
where there are also vast areas of unimproved land, but it may 
safely be said that similar conditions exist there and that 
similar methods would prove efficacious. 

Our area of unimproved land is a tremendous one. If only 
a fraction of this unimproved area is put under cultivation, 
by attracting the man to the land and giving him a chance 
to make good there, the problem of the high cost of living is 
in a fair way of successful solution. 



FREDERICK C. HOWE 155 

IMMIGRATION AND THE LAND QUESTION 

Frederick C. Howe* 

"When I first began to prepare an address for today I under- 
took to set forth the problem of the immigrant in a rather conven- 
tional way, and discuss the purposes to which he is subject, the 
experiences which he has in the city, the personal and group 
difficulties under which he labors. I was treating the immigra- 
tion problem as though it were a separate and detached prob- 
lem; as though out first consideration should be for the 
immigrant to see what could be done for him, to see how we 
could better his lot as he came into this country, to see what 
could be done for a reversal of our negative, individualistic, 
devil-may-care policy of letting the immigrant take care of 
himself with whatever consequences to us and to him as well. 

But the more I got into and studied the subject the more 
it seemed that that was wholly inadequate. The immigration 
problem is something more than an immigration problem. 
It is a national problem. It is a problem of those already here 
as well as those who are coming constantly to us, and any 
problem or any solution of the immigration problem must of 
necessity be a solution of our own problems as well; for the 
things that confront him industrially, economically, confront 
those of our own stock in the cities and in the country disi- 
tricts. So I have been forced to consider this subject of immi- 
gration and the land in its broader aspects of the people and 
the land of those already here as well as those who are daily 
coming to us. 

I am further convinced that the whole immigration problem, 
or the immigration problem primarily, is an economic problem 
instead of being personal, religious, esthetic. It is primarily 
economic. It solved itself as long as this country was open to 
all, as long as 160 acres could be had for the asking, as it was 
when I was in school. Immigration then took care of itself 

* Frederick C. Howe is a prominent author, lecturer and social worker 
of New York City. He is now serving as United States commissioner 
of immigration at Ellis Island, New York. 



156 MARKETING AND FARM CREDITS 

and it rolled westward and westward until it broke on the 
Pacific coast. And then the land was gone; and then it wjis 
appropriated. 

During the last two years at Ellis Island I have been study- 
ing what becomes of the immigrant who comes through that 
port, the largest portal the world has ever known. Through 
it in ordinary times a million people come each year. That 
number has fallen off materially since the outbreak of the war, 
until today it is 250,000. Last year it was approximately 
300,000. Immigration, in fact, has ceased ; for the ebb and the 
flow is almost equal. But what became of the million odd who 
came through that port? Where did they go? Did they follow 
their natural instincts, did they go to the kind of places they 
came from in Central Europe and Italy and Northern Italy? 

Where The Immigrants Settled 

An examination of the statistics of the location of immi- 
grants show that they do not; that they are driven back in the 
cities, into the mining districts, into the industrial sections, not 
because they wanted to go there, but because the land has been 
enclosed. A wall has been erected around the natural resources 
of America, and the immigrant has been compelled to go to 
the packing houses and the mines and the industries and stand 
outside of the door and keep down the wages of those already 
in; because it is the man without a job who keeps down the 
wages of the man who has a job, and it is the fear of the man 
who goes into the factory each morning when he sees men 
lined up ready to take his job away from him that keeps his 
daily wage down. That is another aspect of the immigration 
problem which makes it a national problem; and that is the 
aspect which has caused labor unions to organize labor for 
the restriction of immigration. Just as organized labor is op- 
posing immigration, so on the other hand you will find the 
manufacturers, the employers, the mine owners, urging that 
the door be kept wide open. Not because they love the immi- 
grant, not at all. They want the cheap labor; they want to 
break up antagonism; they want the man outside of the door 
to keep down the wages of the man inside the door. Those 



FREDERICK C. HOWE 157 

are- the economic forces again — on the one side seeking for 
immigration, on the other protesting against immigration. 

During the last 20 years of this new immigration that has 
come to us — this immigration from the south of Europe — 
between 75 and 80 per cent of it has settled in that part of 
the country to the east of the Mississippi and to the north of the 
Ohio, It has been driven, as I said, into the industrial regions. 
And 56 per cent of our foreign born have been huddled and 
congested into the industrial districts until almost all of our 
larger cities contain from 60 to 80 per cent of foreign born 
people, or those immediately descended from persons of foreign 
birth. In Chicago it is between 70 and 80 per cent; in New 
York it is 80 per cent; in Boston it is between 70 and 80 per 
cent; in Cleveland, Pittsburg, in other cities, they have become 
cities of people of foreign birth. They do not own their homes 
they live in groups; they do not acquire our language; they are 
an indigestible mass and only the second generation gets in 
contact with the life of our great institutions. 

Why Immigrants Return 

Every year approximately 300,000 of them go back to Europe, 
partly because they do not like the country to which they have 
come, partly, because they have been mistreated in the country 
to which they come, not by the government but by the employ- 
ers who have broken them up into bunches and used them as 
strike breakers. Down in Pittsburg a short time ago there 
was reported to me one of the largest firms there that had, a 
sign over its employment office, "No Americans need apply". 
A short time ago we gathered together in response to the re- 
quest of a big steel manufacturer 180 men in our employment 
service. The boss came down and looked them over and out 
of that 180 he selected 13 and they were of 13 different nation- 
alities; and when our inspector asked him why, after all that 
labor, he did not take all those men he admitted: "Well, if we 
break them up bad enough they can't unionize; they don't give 
us trouble. ' ' They are more obedient to orders than they would 
be if they were organized as a group, organized in their demand ■ 
and able to defend themselves. 



158 MARKETING AND FARM CREDITS 

Such are the conditions that are driving down in ordinary 
times the standard of living in our cities; long hours of labor, 
making it impossible for the tired laborer to take advantage 
cf the night school or the opportunities offered to hi 
a man who has worked 10 or 12 hours a day in the steel mills 
is too tired to go to school at night. If your problem of immi- 
gration is not a problem of kindness, it is a problem of justice; 
and until you approach it in that way as a governmental way 
we won't get very far. 

And that is another reason why immigration is a national 
problem and cannot be treated as an isolated problem. Just 
as in the beginning immigration was a land problem, so immi- 
gration is a land problem today; you ,can't dissociate the 
two ideas. Why, this country, measured by the standards of 
Europe, could care for 10 times its present population. A 
billion people could live here in comfort if the thought of the 
Nation was put on the subject of people, of humanity, of the 
fair distribution of wealth as it has been on the tariff on prop- 
erty and even on the building of battleships. 

America Can Solve Her Problem 

We can work out the social problem. Little Denmark lia.s 
done it. Germany has made an approach to it. Switzerland 
has done far more than we have. So has Western Canada, 
while Australia leads the van. But we in America have argued 
up to the present day that the only way we could work out our 
salvation was to give away everything we had, to get rid of it 
as quickly as possible ; and today we are trying to get rid of 
our water power, which is the last remaining asset of the 
Nation. We gave away our public domain to the pacific rail- 
roads, and they in turn gave it to their friends, until today 
out of 500,000,000 acres 200,000,000 of it is owned in great 
estates. Those are the figures ; 10,000 acre tracts in California ; 
1,000,000 acre tracts in Texas ; in other states instead of having 
homesteads we have great estates with masters on the one 
hand and servants on the other- — for that is the inevitable con- 
dition. If you doubt that read the report of the United States 
Commission on Industrial Relations which made an investiga- 
tion in two states — Texas and Oklahoma. 



FREDERICK C. HOWE 159 

It sounds like John Stuart Mills' description of Ireland in 
the days of long ago. A few years ago I was in Oklahoma 
when it was being opened up to the world, and it looked like 
the world's garden spot, . capable of caring for millions of 
people in comfort and well being. And the conditions of Okla- 
homa and Texas, as you know, are not different from Iowa, 
California and other parts of the country. But now, we have 
there the two great, to me great, agricultural problems, land 
monopoly on the one hand and the inevitable concomitant for 
tenancy on the other. Yet if you look over Europe and take 
the teachings of history and see what that condition did to 
Ireland, you will see that it impoverished the race and drove 
a half of them to this country; it drove the Scotch people into 
the sea and they came to America to escape it. 

Today in England four people out of five live in cities, and 
the other fifth live in conditions not so good as those described. 
The same conditions made Germany what she is, a country of 
autocracy; landlordism lies back of the present war, because 
it is the aristocrats who own the great estates that form the 
warring classes, while people that own the little bits of land 
like the Serbs and Belgians are people of peace. Wherever 
you find monopoly there you find autocracy and reaction ; 
wherever you find home ownership there you find democracy, 
liberty and love of country and an insistence that the country 
shall represent people rather than property. 

I consider this question of the relation of the people to the 
land, of getting back to the land, the proper relation to this 
primal source of all wealth as a thing that God gave to all of 
us — the land of the Nation — as the primary problem before 
the United States. While I do not ordinarily make any appeal 
to any higher law, or even a law of nature, I can not conceive 
that it is true that God should have given the land of America, 
and the resources of America, to be speculated in, to be owned 
by men who keep them out of use while other men nearby starve. 
I can not believe that those who came first, who happened to 
get here before 1880 should own the land in exlusion of those 
who were born hereafter. I can not conceive that God had 
any such organization in mind, least of all do I believe that He 
intended that one farmer should own 1,000,000 or 2,000,000 



160 MARKETING AND FARM CREDITS 

acres in that great rich state of California or that Texas should, 
be divided as it is, or any other state, into land held for 
speculation rather than for the production of wealth. 

What Shall We Do? 

What are we going to do about it ?, The farmer wants labor ; 
the country wants food. The high cost of living is some way 
or other related to the fact that people are keeping off of the 
land; that labor is not given a chance with nature's resources. 
And I know of no fundamental reform that will ever get at 
that problem, that will ever touch it, that will ever smash land 
monopoly, that will ever draw people to the land in a natural, 
ordinary way except that proposal of taxing land until those 
who own it use it or permit some one else to use it, until we 
stop taxing the things people want, such as labor, produce, farm 
buildings, horses, machinery and the things we all want, and 
put the tax on the dog in the manger, and compel him to use 
or let some one else use it. I can not believe that God intended 
that some people should live without labor nor can I believe that 
God intended that some men should live and work for another 
person. And that is what land monopoly means today, just 
as it meant in the seventeenth century. 

Land Monopoly a General Problem 

It is not a western problem; it is an eastern problem as welL 
I live 40 miles from New York, and within the last year I 
have been trying to find a place to build a house 40 miles 
from New York. Land is held there at $3,000, or $4,000, and 
even $5,000 per acre on both sides of the Hudson. Great estates 
covering townships are held out of use and New York hungry for 
food ! That is an abnormal condition, and I know of no way 
of making those who have appropriated the land in advance 
of its use to use it except the proposal of Lloyd George in 
England to build a fire behind the landlord to compel him, 
as the dog in the manger, to get out of the manger. The single 
tax, it seems to me, will do that; it will automatically draw 
men from the cities and suck them to the land the same as it 
did my father and the same as it did my grandfather, and my 



FREDERICK C. HOWE 161 

great-grandfather, who periodically left one spot to go to 
another land where the land was cheap. Hundreds of thou- 
sands are going over into Canada because land is cheap there. 
They are selling land, Mr. Mead tells me, out in California to 
immigrants which they bought for $7 an acre at $200 an acre. 
People love the land; they want the land, and it is proven by 
the fact that they pay more than they can afford to pay and 
then go bankrupt and are driven back into the cities, the same 
as they have in other countries where the same conditions that 
have prevailed are to be found. 

Governmental Colonization a Solution 

Next to that solution there is a second solution which is not 
nearly so good; it will not get so far; it is not justice; it is 
something better than charity; it is something better than 
philanthropy, and it will help the production of wealth, and 
will tend to end the congestion of all cities. That is the policy 
of colonization, governmental colonization, not private coloniza- 
tion; for I have given up all hope of private individuals being 
able to solve the agricultural problem, the land problem. It 
has got to be approached by the state and by the nation. For 
50 years we have relied on that something that we call individ- 
ual initiative, and individual initiative" now owns things and 
those who were born now have to work for them or starve, 
and that is the condition that individual initiative has brought 
upon us. So the next step is for the states to step in, and other 
nations have paved the way for indicating what can be done. 

There is a bill now before Congress known as the Crosser 
Bill which includes within it almost all of the elements of a 
colonization policy. It looks to the acquisition of 1,000, or 
2,000, or 10,000 acres of land available for farm colonies. The 
Crosser Bill, I believe, intends that the government shall hold 
the title of the land; it shall never deed it away. The individ- 
ual shall be given a ready-made farm and house and barn, seeds 
and livestock, and he will be permitted to cultivate a certain 
section of this area, paying rent therefor to the government. 

That is one alternative. The other alternative is just plain 
peasant proprietorship. Personally I think the government 
will have to go to that length of providing ready-made-farms, 



IQ2 MARKETING AND FARM CREDITS 

barns, and houses. In addition to that we will have to develop 
an agricultural educational policy; have somebody from the 
department in these colonies instructing what to plant and 
how to plant it, and, third, I think, they will have to live 
close together so they will have some companionship and some 
kind of life other than the isolation of the farm. In other 
words, we will have to apply the same kind of science to agri- 
culture as we do to business. And one reason wliy farming 
is in its present situation is that the manufacturing class did 
not care very much about agriculture, and the manufacturing 
class has occupied the whole attention of Congress during the 
last 50 years while agriculture has gotten along the best it 
could. 

Cooperation an Aid to Land Settlement 

There must be cooperative marketing, so that the farmer will 
be protected from exploitation at both ends. Now, our agricul- 
ture must be organized in some such scientific way. 

And little Denmark can offer us an object lesson of what 
can be done for farming. Denmark is the world's agricultural 
experiment station. They have carried it so far that there is 
very little of what we call poverty- in Denmark, or what we call 
misery, at least. Some years ago I was going through the city 
of Copenhagen with a student from the University. I asked him 
to take me to the tenement district, and as I went through what 
he called the tenement districts all the people seemed comfort- 
able, well fed, well clothed. They were laughing and chatting. 
Their shops were just like the shops I was familiar with. And 
he insisted that that was the slum district of Copenliagen, and 
when I asked him why there was not the kind of slums I had 
seen in England, or Berlin, or even New York or Chicago, he 
said in substance, "We have worked out a land policy in Den- 
mark which makes it easy for the man to get out of the city 
onto the farm so that every man who is an employe, a wage 
worker, knows that if he wants to, and he accumulates a little 
money he can get away from being owned by somebody else, 
and can own himself. The government some 15 years ago, 
appropriated several million dollars, ten million dollars, I think, 
and it said, 'We will advance $9 against $1 to any man 



FREDERICK C. HOWE 163 

who has proved to be a farmer and who wants to go out and 
buy a little piece of land, 10 or 12 acres. He must be vouched 
for by his friends and neighbors, but the ground will be fur- 
nished him, the oversight will be furnished him and the coop- 
erative societies will take care of all that he produces. And 
as a result of that and a long policy covering 75 years, today 80 
per cent of the farmers in Denmark own their own farms ; they 
are free peasant owners." 

Public Ownership of Railroads an Aid to Marketing of Farm 

Products 

Ninety per cent own their own farms. They have split up 
the great holdings until almost all of that country up there, 
which is not as fertile as our country by any means, is the 
world 's agricultural station. And that little nation found it 
had to take over the railroads because the private railroads 
wanted to make profit out of the farmers and they wanted the 
farmers to get their products to England at the lowest possible 
cost. A short time before I was in Copenhagen the farmers 
in parliament had decided that the railroads were making too 
much money and the farmers, controlling parliament as they 
do, reduced the rates of the railroads until today they are 
making two per cent and the officials in parliament say, "We 
do not want to make money out of railroads; what we want 
in this country is to make money out of farming; and if the 
railroads break even and put the produce and butter and eggs 
over into England cheaper than any other country can do it 
we will get that market. If we can put our horses down in 
Germany cheaper than any other country we will get that 
market, and even though we run the railroads at a loss, this 
is an agricultural nation and we can afford to pay for it out 
of taxes." 

The real motive of railroad operation there is not profit, but 
service, and growing out of the fact that 90 per cent of the 
people own their little piece of land Denmark has become a 
real democracy, an essential democracy of business. Education 
is cheaper to them, and millions are spent in making the farm- 
er cultivated as well as the farms. I have never been in a 
country where the farmers were so cultured as they are in 



l64 MARKETING AND FARM CREDITS 

Denmark. They have that same kind of culture that a baseball 
fan has. And the baseball fan is one of the most interesting 
people in the world, because he knows his subject and does not 
want to talk about anything else. 

The men sent out from the cooperative societies, come 
around twice a week to collect the eggs, and they stamp the 
dates as they collect them. Then they send them to nearby 
towns, and those nearby towns send them to Copenhagen, and 
they are sent to English markets and the Danish eggs bring good 
prices because everybody knows they are fresh. They are not 
owned by the cold storage people as they are over here; they 
are owned by the government. The government did not do it, 
the farmer did it, for he made the government do it for himself. 

But Denmark does not interest me so much for what it has 
done for farming; it interests me because it has gone a long 
way to abolish poverty. It has shown that government can be 
used for. people just as well as for privilege ; it can be used 
for those who consume and those who produce just as well; 
it can have tariffs for trusts, monopolies, railroads and agencies. 
And that is something to know; it is something to know that 
a people can so democratize their government, can so control 
their government that that government will represent humanity 
and build for humanity and educate humanity and consider 
the consumer as well as the individual monopolist; and there 
are no millers in Denmark, either. 

Break Dowli of Government Control 

Next to the l^nd policy ] think we must have a governmental 
transportation and terminal policy. When I first got interested 
in politics it was as a lawyer in Cleveland, and I was very 
greatly interested in public utility commissions. I was in 
the state senate and aided in drafting the railroad commission 
of that state, and just as I was interested in the regulation of 
railroads and public service corporations so by chance I became 
interested as a lawyer in public service corporations, as 
attorney for them, street railroads and electric lighting 
companies, and water, gas companies and steam rail- 
roads. I tried to keep my mind straight all that time be- 
tween my public duties and my private duties, and I believe 



FREDERICK C. HOWE 165 

in regulation. And yet when the Public Utilities Commission of 
Ohio was created this is what happened: The public utility 
corporation with which I was identified immediately began to 
receive circulars, and the first circular said, "Now, come on, 
let's load the public service commission of Ohio so full of 
immaterial things that it will never get around to regulate 
the material things; let's load it up with things that do not 
count, so that the real consumers will never get a look in," 
That was the attitude in that state, as I watched it in Ohio, 
as I watched in New York last winter. In New York when Mr. 
Hughes was governor the public service corporations fought to 
keep regulation out; they fought to prevent the passage of the 
public utilities laws; they used every means that public service 
corporations can to defeat regulations, and >et last year when 
the constitution was formed those same public service corpora- 
tions went to Albany and tried to put the pubiip service com- 
mission into the constitution so that the people coiild never get 
them out. Why? Well, I need not tell you. Eegulatory 
agencies; the commissions of this country have become the bul- 
wark of railroads or transportation companies, of strtct rail- 
roads, gas companies, water companies, electric ighting com- 
panies — you can not beat it, but they can control it; you can rot 
make them serve the people, and they have in every state that I 
know of excepting California, and I challenge even Wisconsin! 
The corporations of Wisconsin have not done any good for the 
consumers of Wisconsin, and neither have the public service 
corporations, just as in Ohio, New York and all over the 
country, so far as I know. 

First we had competition and then we had regulation. I am 
satisfied we have exhausted the regulation. I do not believe 
that individuals appointed as they are appointed, or elected 
as they are elected — that individuals picked out here and there 
—can fight today against the combined power of the railroad 
or transportation industries of this country. It is an impossible 
task. We have tried. It never did succeed. It did not succeed 
in Germany; it did not succeed in Switzerland; it did not suc- 
ceed in Denmark. It has failed all over the world, and it is 
bound to fail all over this country; and so I have been driven 
to believe in public ownership of the railroads as the only way 
out. 



IQQ MARKETING AND FARM CREDITS 

Railroads Circulation Mediums 

Well, there are other reasons, too. Some years ago I was in 
Berlin talking to the burgomaster of Berlin, along with 100 
American businessmen, and they made this statement, with a 
good deal of front, "What we have come over here for, Mr. 
Burgomaster, is to learn how you Germans get such a magnifi- 
cent business men's administration. AVe want a businessmen's 
administration of our cities in the United States." The burgo- 
master's eye twinkled and when he was called upon to speak he 
said, "I have listened with a great deal of interest to the re- 
marks of Mr. So and So, the president of the chamber of com- 
merce. It is a statement I have heard a great many times, that 
they wanted a businessmen's administration." "Well," he 
said, "I just read in the New York papers that the city of 
New York had just given away to private people the ownership 
and operation of the subways in New York^ which earn 20 per 
cent. And in the same issue of the paper I noticed that New 
York had just taken over its ferrys, which lose money. You 
keep your sewers over there, which cost you money, and you 
give away your street railroads, which make money; you keep 
your parks, which you have to pay money for, and you give 
away your gas companies, which yield enormous dividends. 

"You in America call it good business administration to give 
everything away that is worth anything and keep anything that 
is not worth anything; we in Germany consider that bad busi- 
ness, we keep these things, the railroads, telegraphs, the street 
lighting companies and street railway companies, and we make 
money out of them." 

But, do not think that business policy over here means run- 
ning these railroads to make money. No, they are run for 
service; they are part of the circulatory system of the human 
body, and you cannot have a state and have a foreign agency 
owning your circulatory system any more than the private 
individual can let out his nervous system or circulatory system 
to somebody else outside of him to run it for him. I heard a 
business man in Cleveland, a man who had grown wise, say, 
"Why, I believe in the public ownership of railroads. I own 
this big building over here. What would you think if I let 
some other man run the elevators and charge fares on them? 



FREDERICK C, HOWE 167 

Why, lie could determine all about my tenants, their service 
and everything else, and he could drive them all out of the 
buildings if he wanted to by the exorbitant rates and fares he 
charged. ' ' 

I think that is a perfect parallel to Avhat we have done in 
this country ; we have given away the railroads and almost 
everything else worth while and our cities have given away 
the street railroads and everything else that is worth while; 
and you see in the cities the street railroads trying to pack the 
people in as close as possible because they make more money 
out of the strap hangers hauling them a little way than they 
do hauling them a great way. 

Why Cities Are Congested 

Our cities have been built by the transportation agencies who 
make more money out of huddling people together than they 
do in giving' them a chance on God's green earth. The same 
thing is true of the transportation agencies, it is not to the 
profit of the railroads to expand their lines, because the profits 
fall with each additional increase of investment ; if they expand 
too widely their interest and dividends fall. If they can keep 
all the traffic running on one line at the highest rate of speed 
it increases dividends; it is to the profit and advantage of rail- 
roads to limit transportation facilities rather than to extend 
them. 

Really, it is to the profit and advantage of the community 
to expand transportation facilities. I think there is an inevi- 
table conflict between the private ownership of public functions 
and the public. So, my friends, it is not because I care 
for the money the railroads would make if they were owned 
by the government, it is the idea of service, it is the idea of 
completely changing around the point of view so that the men 
at the head of the railroad system will be thinking of you and 
will be thinking of me. 

But just think what they did in Europe; the men were put 
at the head of the railroad systems so that as soon ais they 
took them over they could not help it, they began to think about 
the people; they built lines where they were needed, and be- 
cause they need them over there. They found the raw ma- 



168 MARKETING AND FARM CREDITS 

terials here and the manufacturing center here, and they said, 
"let's get it so you can put the raw materials to the manufac- 
turer cheaper; we want means by which the man who ships 
can attach a bill of lading to South America and get his money 
right away." And they did it. "We want our people to travel 
as much as possible," they said and made their rates as low 
as possible. In Belgium they said, "We want to get the people 
out of the cities. Let us make commutation for the poor. ' ' And 
they made the rates 30 miles out, so 'that every night and every 
morning as you run through the Belgian cities you find train 
after train after train of working men leaving a little piece of 
land out in the country and coming into the city to work and 
then going out again in the evening. In Denmark they do the 
same thing and in Switzerland they do the same thing. They 
say, "It is a good thing for the people to travel," and so they 
give you two weeks' travel. You can travel 10 miles or 1,000 
miles, one hour or every hour in a day or night, and it costs 
you just an ordinary small sum. The circulatory systems must 
be for the people and run by the state. And I do not believe 
we will get very far until we own our transportation agencies, 
and run them for the farmers, for the real producers and the 
consumers. 

The same conditions that are found in the United States were 
found all over Europe. They could not harmonize the public 
and private interests, they were so much at war, so much at 
conflict ; and state after state until every nation in the world 
except England and the United States and France own their 
railroads, their telegraphs and telephones and express agencies. 
But some people say the American people are not fit to -run 
their own affairs. Somehow the people who say that are the 
people who own the things that they do not want us to own. 

What Makes for Efficiency in Public Service 

Are not the American people fit? Why, look at the Panama 
Canal. Private contractors fell down on it and the government 
took it over without any preparation and built a 300 mile 
canal without a suggestion of graft. They built a fine piece 
of work ; they introduced hotels ; they ran a railroad down there 
and make a profit out of the railroad. The finest spirit prob- 



FREDERICK C. HOWE 169 

ably this country has ever seen is manifest among the employes 
■of that railroad down there, and men said when they came back 
from* there that they were not gambling at night, they were 
fighting over whether their section moved more stone or ma- 
terial today or last week than this other section, than this other 
section, at the lowest cost. There was the finest kind of esprit 
de corps, not because they were working for the money, but 
they loved the Nation and they loved the job and they put it 
over. 

The post office is another example. See what the post office 
does; it sends a letter all over this country and to Mexico, not 
for profit but for service; it carries the rural free delivery; it 
carries a box for me for a few cents. The numbers of parcels 
carried annually is 400,000,000, and nobody doubts but what 
the post office service will send a secret service man to trace 
the loss of a letter, to trace the loss of a bit of money. That 
is what the post office service does in comparison to what the 
railroads do. One is moved by service, not by profit, and the 
other is moved by how much money can we make ; how many 
securities can we issue ; how can we juggle with this particular 
property to unite it up with some other problem ? 

Why American Railroading Is Unhealthy 

Railroading in the United States has ceased to be railroading. 
If you want a story of what has happened to the transportation 
agencies of the United States, send for the report of the Pujo 
Investigating Committee, which shows that in 35 years' time 
150,000 miles of railroads are owned and controlled by four 
banking institutions in New York, and they control almost all 
of the arteries in this country, so that you could not build a 
railroad, I could not build a railroad, a branch line could not 
build without the assent of all these great trunk systems owned 
by four banking houses who monopolize them. And they did 
not get them with their money, but with your money and mine 
welded together through the banking institutions all over the 
country, and sent down to New York by different depositors 
and kept down there until our railroads ceased to be circulatory 
systems. They became things that men gamble with and specu- 
late with at your cost and mine. That is an unhealthv condi- 



170 MARKETING AND FARM CREDITS 

tion to me. It is a thing that cannot last; it is going to break 
down. We must overcome it and realize that we must do what 
other countries have done — we must do it for free demcrcracy 
if for nothing else; to save our politics, if for nothing else; tO' 
save agriculture, for agriculture is primarily dependent upon 
getting its goods to tidewater, and cannot leave things to fight 
their way through monopoly all the way from Dakota to Port- 
land, Maine, or New York. 

But what is true of the transportation agencies is true of 
those things that are linked up with the transportation agencies, 
the slaughter houses, the abattoirs, the packing houses, the ter- 
minals — they are just as much part of the circulatory system 
of the Nation as are the railroads. 

England and the United States are the only countries in the 
world that have private slaughter houses, private abattoirs, pri- 
vate packing houses. Some years ago I was going outside of 
Dresden and I came to what looked to me like a beautiful spot- 
less town. I said, "Is this a model town built by some manu- 
facturer?" And the driver said, "No, this is the slaughter 
house, a municipal slaughter house ; a town of 400. ' ' However, 
it had about four and a half million in its slaughter houses. 
They had just killed 6,000 head of sheep before I was there, 
and yet it was a clean, spotless town. The man said, "We 
like to have visitors come here because the more visitors that 
come the cleaner and better we have to keep it." And the 
farmers frought their sheep up to the one side and the butchers 
came in and they were slaughtered under the most sanitary 
conditions. And the people came in and got their meat at 
cost. It was pure and clean, and the farmers got the value of 
their labor. Now, I know enough about it to know that that 
is not a condition which prevails in the United States. I know 
that other countries have gone through the same problems that 
we have gone through and have found it necessary to take' 
over their abattoirs, their teruiinals, the things that enterprising 
middle men rake off of all the year long. 

Down in New York it w^as recently said that out of every 
dollar 65 cents was taken by the middle man while the farmer 
got 35 cents ; that eggs were being held at 85 cents which cost 
25 cents for the cost of production. 



FREDERICK C. HOWE ]71 

Public Ownership the Next Step 

So I have come to believe that our next step in marketing^ 
our next step in immigration, our next step in a constructive 
program, even a preparedness program, if you want to call it 
that, is to end this idea that the government should do nothing 
except run a police force and adopt the idea that the govern- 
ment must do anything that is necessary to protect its people 
from extortion and exploitation. It must do whatever is neces- 
sary to promote those industries that need promotion. For 
one, I am satisfied that regulation has not only failed, but 
will continue to fail. I am satisfied that we cannot permit to 
live economic interests in our political life that are stronger 
than the state, and expect to have the kind of democracy that 
we want, any more than we could have a strong slave-owning 
aristocracy in the state and have the kind of nation that we 
want. Everything drives me to the conclusion that the govern- 
ment must own the railroads, the terminals, the slaughter 
houses, the abattoirs, those things through which agriculture, 
farm produce, industrial products flow to their destination ; that 
we must control those things through ownership, not through 
sending a clerk around every once in a while to add up the 
figures of a public service corporation and then three months or 
three years afterwards some decision is made, and eight years 
afterwards the Supreme Court of the United States says, ' ' Well, 
we think it is probably unconstitutional and will not stand." 

And that is about all we get out of our state regulation, al- 
though I admit that we do get rather more than that out of 
our federal regulations; but it is because transportation is a 
public function that I believe it, and I do not believe any pri- 
vate corporation has a right to own land and use it where other 
people want to use it; that I believe that the only way to cure 
that is through the taxation of land values, putting it into use. 
And along with that I think the government rather than philan- 
thropic societies must work out the problem, form colonization 
groups with educational recreation and the advantages that 
go with the cities. In other words, we must make this a public 
instead of a private program. 



]^72 MARKETING AND FARM CREDITS 

REMEDIAL ACTION FOR FARMER IMMIGRANTS 

Lajos Steiner* 

About 30,000,000 immigrants have landed here since 
1819. Since 1883 about 70 per cent of these new arrivals have 
come from Central, Eastern and Southern Europe. The bulk 
of these arrivals were peasants in their countries of origin, 
tillers of the soil. They are good farmers. The soil which they 
farmed in Europe has been under cultivation for over a thou- 
sand years, and is still fertile and productive. These residents 
are land hungry, and save every dollar that can be saved out 
of their wages for the purpose of purchasing land as soon as 
their accumulated savings will make it possible for them to 
do so. The ambition of the peasant immigrants is to save 
enough to enable them to buy a farm. They consider the 
status of the owner of a farm — even of a very small farm — 
way above that of an industrial employee. The social and 
financial status of a farm owner is deemed to be the most 
desirable one of any other status; to till the soil owned by 
himself, to raise cattle and poultry, grow grain, vegetables and 
fruit, is the cherished hope of our resident peasant immigrants. 
All hardships are disregarded for this cause, all their energies 
are expended for this end, all their visions of happiness in old 
age are pictures of the yearned-for farm. Peasant immi- 
grants are characterized for their indifference for city amuse- 
iments. 

Immigrants As Industrial Wage Earners 

Industrial employment provides work and wages in all sea- 
sons. The expansion of industries creates a demand for un- 
skilled labor. It induces the native farmer's sons and the 
European peasant to quit agricultural toil and follow those 
who send tidings of high and steady wages. The information 
of immediate employment at higher wages than those obtain- 



* Lajos Steiner of Chicago, himself an immigrant, is commissioner 
•of immigration for the Union Pacific Railway lines. 



LAJOS STEINER 173 

able at the old occupation effected the emigration from Europe, 
the migration from village to cities, from farms to the mills 
and mines. Present methods and the manner of proceedings 
at our industrial production have been so developed by modern 
technique, that the employment of unskilled laborers is possi- 
ble at the construction and manufacture of all that which is 
produced by our diverse industrial establishments. The native 
farm hand and the European peasant are employed by our 
industries without loss of time in preparatory instructions, at 
wages acceptable to both, the employer and employes. Ninety- 
nine per cent of our resident peasant immigrants are occupied 
at any but farm work. Newly arrived immigrants do not engage 
in farm work as there is no steady employment there. The col- 
onization on farms of this sort of new arrivals is impracticable, 
because they have no money to purchase farms. 

The Forces That Prey on Immigrants 

Legitimate banking ignored the deposits of resident peasant 
immigrants. The United States postal savings banks are, for 
all practical purposes, not available for the masses of these of 
our residents. Concerns operating under the name of private 
banks have been established at all those points, nooks and cor- 
ners where peasant immigrants earn wages. The business of 
these ^'banks'' consists of the soliciting and exporting the sav- 
ings of immigrants, of the sale of steamship-tickets and no- 
tarial certification. This sort of "banks" monopolize the cus- 
tom of and keep away the bulk of our resident immigrants 
from Americanization; they induce them to export their sav- 
ings, and to re-migrate in time. Failures are frequent; the 
losses caused usually amount to 100 per cent. Recently Chi- 
cago had a veritable epidemic of private bank failures. The 
advertisements of these "banks" constitute the largest part of 
the income of certain foreign language newspapers. Most of 
these newspapers cooperate with the consular agents of the 
respective European governments in keeping our immi- 
grants from becoming Americanized. They and the private 
banks consummate the exportation of the savings and the re- 
migration of the fittest of immigrants. Unscrupulous dealers 
in farms exploit the credulous. Obviously, such dealers care- 



174 MARKETING AND FARM CREDITS 

only for immediate profits and disregard what becomes of the 
new settler on the farm. AVith few exceptions, immigrant farm 
purchasers lose their investment in land. The respective 
dealers keep the amounts paid to them and look after other 
victims, to be dealt with in like manner. Frequently the same 
farms are sold to three different parties within five years. The 
experience of immigrants in farming scares away the masses 
from agricultural venture. 

Cash Export and Re-migration 

About $300,000,000 are exported in each normal year by our 
resident immigrants. About 400,000 of such residents re-mi- 
grate to Europe in each normal year. Since the war re-migra- 
tion has stopped, and the exportation of savings has about 
doubled. Low rates of European money, constant urging by 
the respective concerns, and the belief that it is not possible 
to engage successfully in American farming, result in the ex- 
portation of about $50,000,000 per month. Systematic, work is 
carried on for having the moneyed immigrants return to the 
native countries immediately after the war. Thus we would 
lose our best immigrants, who could no more return, as Europe 
will need for decades to come, all able bodied males, especially 
the thrifty tillers of the soil with cash funds. It is reported 
that about 1,200,000 steamship tickets have been sold already 
to resident immigrants. It is said that the respective consul- 
ates are ready to summon the immigrants to report in their 
native villages immediately after the war under penalty of 
having their property confiscated, their families dispossessed, 
and themselves prosecuted. 

Change for the Better 

A change for the better could not fail to result if these land 
hungry, useful and thrifty people could be assisted to invest 
their savings in American farms so that they could thrive on 
farms. Make our millions of idle acres bear and grow farm 
produce, create wealth and contribute to public resources. 
The increase of production of food stuffs would soon remedy 
many of our ills. On farms the Americanization of these 



LAJOS STEINER 175 

sturdy, healthy, good people would follow as a matter of 
course, — their descendants would become as patriotic and loyal 
citizens as the children of the earlier arrivals. Intelligent as- 
sistance would also result in dispelling that artificially created 
misconception that peasant immigrants are disliked in the 
United States. Peasant immigrants are ignorant of American 
resources and opportunities; they are unable to read our lan- 
guage ; they cannot be expected ever to affect a change for the 
better. Remedial action should be initiated by the competent 
native Americans. The resident peasant immigrant need not 
be preached the beauties of farm life. He does not have to be 
urged. He has not to be taught farming. He does not heed 
financial aid. From the first day he landed he has been saving 
with the sole view of becoming a farm owner. Our resident 
peasant immigrants have the desire, the ability and the cash 
f^^nds. All they need is a friendly hand to guide them right. 
Arrangements are necessary for their colonization on farms so 
that it shall be possible for them to prosper on the farms. Un- 
fortunately, while there are many influences at work to make 
him export his savings, to prevent him from becoming Ameri- 
canized, and to have him re-migrate, with the exception of the 
colonization work recently inaugurated by. the Union Pacific 
System, there is practically nothing done to counteract the 
harm caused by those who prey upon our immigrants. 

The Remedy 

There are times, — the present is such a one, — when efforts 
should be made for improvement. Private banks should be 
abolished by national legislation, as the abuses committed ares 
interstate and international. Colonization on farms should be 
regulated by law and supervised by our national government, 
ap the lands of one state are often sold to residents of another 
state. 

At the mines, labor camps, mills and such other points where 
numbers of employes earn wages, branches of the United 
States postal savings banks should be established and main- 
tained. An article should be incorporated in that peace-cov- 
enant which will end the war, according to which the re- 
spective European governments should be prohibited from 



176 MARKETING AND FARM CREDITS 

molesting our resident immigrants. 

At the time of high cost of living and the tide from country 
to city so valuable an asset as our resident peasant immigrant 
should not be wastefully squandered to our irrevocable loss. 
We have millions of sturdy peasant immigrants, yearning for 
that tillable land which is lying idle. Peasant immigrants on 
American farms would be of inestimable advantage not only 
to themselves, but to the United States also. The peasant im- 
migrant knows how to keep the soil fertile, as his ancestors 
knew, who have farmed for over a thousand years and did not 
rob the soil of its fertility. They re-migrate to Europe solely 
because no systematic efforts are made to direct them upon 
farms in the United States and because systematic work is be- 
ing conducted to keep them away from Americanization, to 
have them export their savings and re-migrate. This sort of 
settlers, unlike tenants, take an interest in preserving the fer- 
tility of the soil, improve the farm, stock and implements. As 
owners and taxpayers they are interested in lasting progress 
and welfare. Only those of them discontinue industrial em- 
ployment who return to farming, but instead of departing to 
Europe, they should engage in American agriculture, produce 
food stuffs, decrease the high cost of living, furnish opportuni- 
ties to tradesmen, merchants, banks, hotels, druggists, physi- 
cians, and a multitude of others to thrive in the new agricul- 
tural colonies, and aid in maintaining a sound and prosperous 
state. 

The abolition of the exploitation practiced under the guise 
of private banking would end a whole series of mean and in- 
jurious abuses. 

The amounts deposited by immigrants in the United States 
postal savings banks would be re-deposited in the legitimate 
American banks; the exported sums become lost altogether for 
American business. 

Proper colonization and the success of the first colonists 
would attract the masses and induce them to follow the exam- 
ple. 

The prevention of European governmental interference with 
our immigrants would result in their Americanization, and the 
permanent improvement of our national prosperity. 



LEONARD G. ROBINSON 177 

FINANCING THE INSOLVENT FARMER 

Leonard G. Robinson* 

Three years ago, while testifying before the Joint Congres- 
sional Committee on Eural Credits, I created not a little dis- 
appointment in the ranks of the sponsors of the pending rural 
credit bills, and not a little satisfaction in the ranks of their 
opponents, when I directed attention to the fact that none of 
the bills under consideration made the slightest provision for 
the insolvent farmer. 

What Is An Insolvent Farmer? 

An insolvent farmer is the farmer or would-be farmer who 
cannot give the time-honored "fifty-fifty" first real estate 
mortgage as security for a loan. To this class belongs the 
marginal farmer who cannot put his farm on a paying basis 
because his encumbrances have reached the limit of market- 
able security. To this class belongs the tenant farmer who is 
compelled to shift from farm to farm because he lacks the 
means of acquiring a farm of his own. Finally, to this class 
belongs the would-be farmer, that is, the farm-hungry man in 
the city, native as well as immigrant. 

The terms solvent farmer and insolvent farmer may not be 
technically correct. In fact I have been taken to task for tak- 
ing undue liberties with the English which, by the way, 
is not my mother tongue. I noticed, however, that in subse- 
quent hearings this term was used quite freely, and that it 
has even been adopted by some of the more important finan- 
cial publications. Be that as it may, the term serves the very 
useful purpose of designating the two classes of farmers 
around whom the recent rural credits agitation has centered, 



* Leonard G. Robinson of New York City was for 10 years general 
manager of the Jewish Agricultural and Industrial Aid Society. He 
is a pioneer worker and thinker on rural credit problems in this coun- 
try. He has accepted the presidency of the First District Federal Land 
Bank, of the Federal Farm Loan System, at Springfield, Massachusetts. 
This address was delivered to the Fourth National Conference on Mar- 
keting and Farm Credits in Chicago, December 4-9, 1916. 



178 MARKETING AND FARM CRiBDITS 

and to draw a clear line of demarcation between two distinct 
problems. Financing the solvent farmer is a financial problem, 
pure and simple. All that the solvent farmer needs is the ma- 
chinery that will place him in a position to compete on equal 
terms with other solvent industries for the world's surplus 
funds. But the insolvent farmer, who has no acceptable mar- 
ketable security to offer, cannot be financed on the same basis. 

What Is the Problem of the Insolvent Farmer? 

As a concrete illustration, take the recently enacted Federal 
Farm Loan Act and apply it to the average tenant farmer. 
Let us call him Bill Jones. Jones has farmed for many years 
on rented farms. By industry and good management he has suc- 
ceeded in acquiring a fine stock and a fairly complete equip- 
ment of farm machinery. Jones reads in his favorite farm 
paper that the new rural credits law is designed to help ten- 
ant farmers become farm owners. He talks it over with his 
good wife, and they decide to buy the farm on which they live. 
They know their farm and want to make it their permanent 
home. It is not an expensive farm. The price is $8,000, and it 
is worth it. 

Jones gets his neighbors together, some of whom, like him- 
self, are tenant farmers. He opens the meeting with a few ap- 
propriate remarks, and unfolds his plans for organizing a 
national farm loan association. He tells them also about his 
plans for buying his own farm. Of course, he has no money, 
but he intends to borrow the needed money through the asso- 
ciation. One of the farmers present calls attention to the fact 
that the most that can be borrowed under the new law is one- 
half of the value of the land, and that in order to buy the farm 
Jones will have to find at least another $4,000 somewhere else. 
Jones is frankly nonplussed. He scratches his head. "By 
George," he says, ''I never thought of that." 

Jones returns home crestfallen and very much disappointed. 
His little wife comes to the rescue. Why not write to their 
congressman? Jones is pleased with the idea. He writes a 
good strong letter, and in due course he gets his reply. The 
congressman is most sympathetic. Yes, 50 per cent is unfor- 
tunately the limit that can be borrowed. However, he con- 



LEONARD G. ROBINSON 179 

eludes with the comforting suggestion that the local bank or 
the owner of the farm might possibly be induced to take q, sec- 
ond mortgage for the balance. Jones again scratches his head, 
and says, "By George, I never thought of that." 

But Jones has a distinct recollection of what a time he had 
in getting $300 from his bank a short time before. So he dis- 
misses the bank. But the idea of the owner taking a second 
mortgage strikes him as rather good. Off he goes to see Squire 
Smith and lays the proposition before him. The squire is a 
friend of the Jones family. He has known Bill since he was 
knee high to a grasshopper. He listens sympathetically, but 
cannot quite see it from the same angle. Of course he will be 
glad to do anything he possibly can to help Bill. But a second 
mortgage for $4,000 is entirely out of the question. He points 
out to Jones that if anything should happen and the land bank 
should find it necessary to foreclose, his second mortgage will 
be clean-wiped out. Jones once more scratches his head, and 
says, "By George, I never thought of that." 

And so it is. Those who believe that the problem of the in- 
solvent farmer, the tenant, and the landless has been solved 
with the enactment of the Federal Farm Loan Act have not 
thought of that ; or of that ; or of that. 

Please do not misunderstand me. This is not intended as a 
criticism of the farm loan act. On the contrary, it is an in- 
dex of its fundamental soundness. Although far from perfect 
— no legislation is perfect — it is a really and remarkably ef- 
fective maiden effort. What I wanted to show is that to all 
intents and purposes the average tenant farmer is still insolv- 
ent insofar as his ability to obtain the necessary credit to 
buy a farm is concerned. This, of course, is truer still of the 
landless man in the city. As I pointed out to the congressional 
committee in charge of the bill, the difficulty lies in the fact 
that it is not possible to devise one system of rural credits that 
will serve equally the solvent and the insolvent farmer. You 
cannot lower the solvent farmer to the level of the insolvent, 
nor can you hoist the insolvent to the level of the solvent 
farmer. Financing the solvent farmer, as I have stated, is a 
financial problem. But financing the marginal farmer, solving 
the tenancy evil and promoting the back-to-the-land movement 
■ — or by whatever name you may choose to designate the innate 



180 MARKETING AND FARM CREDITS 

land hunger of the average human being — is not a financial 
problem at all. It is a social and political problem. 

The Farm Tenant 

It is not my intention to tire you with an exposition of the 
evils of farm tenancy and absentee landlordism. These are too 
obvious for argument. We all know the economic waste, the 
moral bankruptcy, the civic and social sterility of farm ten- 
ancy. According to the last census, 2,354,000 of the 6,000,000 
farmers in the United States are tenants. This constitutes 37 
per cent of our total farming population and an increase of 
16 per cent over the preceding census. And yet, so far as I 
am aware, no serious attempt has ever been made to attack the 
problem rationally and comprehensively. 

The argument is often put forth — chiefly by landlords — that 
the majority of tenants are perfectly contented with their lot. 
In fact they prefer to remain farm tenants. I fear that these 
gentlemen mistake hopeless resignation for contentment. The 
average tenant farmer, like the average farmer, takes his finan- 
cial troubles with due Christian piety and resignation, and 
looks upon them as a visitation from heaven, like drouth, 
frost, and bugs. 

Then there are those who dismiss the subject with the off- 
hand statement that these tenant farmers are a lazy, shiftless, 
and good-for-nothing lot, and that it is quite useless to waste 
any time on them. To my mind, this very argument is suffi- 
cient to cause grave apprehension in the minds, of all thinking 
men. Just imagine — one-third of our farming population, or 
about 10 per cent of our total population, hopelessly shift- 
less and shiftlessly hopeless. It is a situation pregnant with 
menacing possibilities, threatening the structure of our democ- 
racy and the very foundation of our civilization. Personally, 
I do not believe that there is any such proportion of shiftless- 
ness among our farm tenantry. But assuming, for the sake of 
argument, that this is true, I want to say that the more shift- 
less, the more good-for-nothing, and the more irredeemably 
hopeless our tenantry is, the graver is our problem, and the 
more urgent is the call for a remedy. So much for farm ten- 
ancy. 



LEONARD G. ROBINSON 131 

What About the Farm Home Seeker? 

We all know that the vast majority of our immigrants are 
farm born and bred. And we have often wondered at their 
perversity in choosing an industrial instead of agricultural 
career. The reason is economic. 

The newcomers have not the money to start farming on their 
own account, and farm labor is neither steady enough nor does 
it hold out any other inducements to them. They accordingly 
dig our coal, build our roads and what not, pinching and slav- 
ing, and seeing, in their mind's eye, the little farm home ap- 
proaching nearer and nearer with every heave of the shovel 
and every swing of the pick. Unfortunately, for the want of a 
little encouragement, many of them fall an easy prey to the 
exploiter and the land shark j while thousands of others, los- 
ing all hope of realizing their dreams in the land of their adop- 
tion, leave each year, with hundreds of millions of good Amer- 
ican dollars to be invested in farms in their native lands at 
highly inflated prices. Accustomed to a higher standard of 
living and to a higher degree of personal liberty, many a re- 
patriate sooner or later finds his native land with its lack of 
educational facilities, its enforced military service, and its 
burdensome taxation, more than he bargained for, and returns 
to God's country, minus his money, to start all over again. 

Sentiment aside, it is a short-sighted policy that permits the 
immigrant, who becomes more and more of an asset as he ac- 
cumulates money and acquires American ideals, to leave the 
country, when a little guidance and encouragement would 
transform him into one of the most stupendous productive 
forces of our country. 

I hope you will not think I am a back-to-the-soiler. I am 
not. I do not believe that there is any greater virtue in mak- 
ing two blades of grass grow where formerly there grew one, 
than in building two automobiles where formerly there was 
but one. Besides, the automobile has been the greatest single 
influence in farming of all time. I am not especially inter- 
ested in the reclamation of the desert, the swamp or the aban- 
doned farm. I am more interested in the human factor en- 
gaged in the work of reclamation. I am not nearly as much 



182 MARKETING AND FARM CREDITS 

interested in increased agricultural production as in the agri- 
cultural producer. I don't even care a straw about the in- 
creased cost of living — though the Lord only knows I have 
more than academic interest in the subject — but what inter- 
ests me most are the thousands of soul-wearj, land hungry- 
human beings — native as well as immigrant — taxing their ener- 
gies to the utmost in the ultimate hope of exchanging some 
day the congested city for God's open country, the tenement 
for the homestead, the factory and mine for the farm. 

This, in brief, is the problem of the insolvent farmer — the 
problem of the landless. 

How Is the Problem To Be Solved? 

Europe, in its usual way of doing things, has made the prob- 
lem of the insolvent farmer political and governmental. Rus- 
sia adopted this solution in dealing with the newly freed serfs, 
and in its Siberian colonization. Germany employed it in its 
colonization policy in the Polish provinces and in West Africa. 
The principle was accepted in England with the enactment 
of the Small Holdings Act in 1908. Even democratic Australia 
and New Zealand have dealt with the subject on a semi-politi- 
cal basis. The indications are that in this country we are 
tending in the same direction. The Grosser Bill, introduced in 
Congress last February, to my mind a most astonishing legis- 
lative pot pourri of feudalism, communism, Dowieism, prohibi- 
tion and Utopia, is, nevertheless, sound in so far as it is a rec- 
ognition of the social and political significance of this problem. 

But conditions here are so different that I cannot believe 
that the problem has as yet reached the stage of national legis- 
lation. The problem of Maine, with 5 per cent of its farms 
occupied by tenants, is not the same as the problem of Mis- 
sissippi, with 67 per cent of its farms in the hands of tenants. 
The problem of Iowa, with 95.4 per cent of its area in farms, is 
not identical with that of Arizona, with 1.7 per cent of its area 
in farms. Federal action, therefore, is manifestly open to grave 
objection. Besides, not only does the subject appear to come 
within the special province of the states, but they are clearly 
more competent to deal with it. 



LEONARD G. ROBINSON 183 

But while I believe that any state desiring to develop its 
agricultural resources or where farm tenancy has become a 
menace in its body politic cannot go very far wrong in recog- 
nizing the social and political significance of these problems 
and in endeavoring to solve them through the use of its credit 
and taxing power, I am not altogether convinced that state 
action is indispensable, or that it is even the best or most prac- 
ticable solution of this vital — and, in the last analysis, na- 
tional — problem. Apart from any political consideration, the 
states where the problem is the most acute are the least likely 
to deal with it on rational business lines. And it is on business 
lines alone that the problem can be satisfactorily dealt with. 
Let me give you a bit of my own experience. 

Experience of a Philanthropic Society 

The Jewish Agricultural and Industrial Aid Society, with 
which organization I have the honor of being identified, has 
been engaged in solving the problem of the insolvent farmer — 
in its limited and restricted sphere, to be sure, but none the 
less effectively — for 17 years. During that time it has 
established upon farms 3,500 families in 36 states of the 
Union and in Canada. The total financial outlay amounted to 
$2,065,391.13. 

To help so many with so small an outlay requires not only 
financing but finessing. How is it accomplished? The first 
step is to taboo the first mortgage. It is only in extreme emer- 
gencies that we make a first mortgage loan. We leave the first 
mortgage to the vendor of the farm, the bank, the insurance 
company, or the private investor. The next step is to help our 
farmers to raise as many additional mortgages as they can for 
as much as they can. The third step is for us to take what is 
left over and what nobody else can be coaxed, cajoled, or sand- 
bagged to take. For example : of the 396 loans made last year, 
only 44 were secured by first mortgages, while 186 were on 
second mortgage, 108 on third mortgage, 27 on fourth mort- 
gage, four on fifth mortgage, 13 on chattel mortgage, 5 on 
unsecured notes, and the remaining 13 on purchase contract. 
Just to show you that all mortgages look alike to us, I will tell 
you that this year we made a loan for which our security is a 



184 MARKETING AND FARM CREDITS 

sixth, real estate mortgage on a farm in Connecticut. And 1 
am willing to wager that we will not lose any money on this 
mortgage either. 

"The insolvent farmer/' says the "Journal of the Ameri- 
can Bankers' Association" in a recent article reviewing our 
work, "is not such a bad risk as might be supposed, even 
though working on charitable aid." "With loans decidedly 
marginal and security which is, to say the least, substandard, 
you will doubtless conclude that our losses must surely be ap- 
palling. Let us see. As I have stated, in 17 years we 
have actually lent $2,065,391.13. Our total losses for the en- 
tire period aggregate $64,217.94, that is, 3.11 per cent. That 
our insolvent farmers are not as insolvent as they appear, is 
shown by the way they meet their obligations. Last year 
their payments amounted to over $160,000, of which $40,000 
was interest. This year they will aggregate about $200,000. 

Just think. This is what was accomplished with farmers 
who were not only insolvent financially, but agriculturally as 
well. What, therefore, could not be accomplished with our 
army of indigenous tenant farmers, inspired by a new inde- 
pendence and a new hope? And what could not be accom- 
plished with some of the best European farming material 
right in our midst if given a chance for land ownership, which 
to them is the emblem of nobility? While wrestling with our 
own difficulties and solving our own problems, I have often 
wondered why American philanthropy, American statesman- 
ship, American enlightened self-interest has so long over- 
looked a field of activity so pregnant with good, so fruitful in 
results, and yet so consonant with sound business and financial 
principles. 

What is needed is a national organization — call it, if you 
will, the Agrarian Bank of America — that will perform on a 
nation-wide' scale the same functions the Jewish Agricultural 
and Industrial Aid Society is performing for the Jewish immi- 
grants. 

The Agrarian Bank of America 

It is not my intention here, nor is this the time or place, to 
enter into details. But let us consider very briefly what an in- 



LEONARD G. ROBINSON 185 

stitution of this kind ought to be like, and how its creation 
will react upon the status of the insolvent farmer, the tenant, 
the landless man, and our country's agriculture in general. 

Our bank should have two kinds of capital stock. This 
stock should, on the one hand, consist of preferred shares to 
be subscribed for by investors. On the other hand, there 
should be the common shares — without par value — to be sub- 
scribed for and owned only by borrowers. The preferred stock 
should be subscribed for by philanthropists and capitalists. 
I say philanthropists and capitalists advisedly. That is the 
only combination that will work. The bank should stand mid- 
way between business and philanthropy, or — to put it more 
correctly — combine business with philanthropy. It should not 
be a money making institution. Its operations should be con- 
ducted on a high social plane, and its stockholders should be 
satisfied with a moderate return — say, four per cent — on their 
capital. At the same time it should not be considered a char- 
ity. Its philanthropy should be conducted according to the 
most approved business and financial principles and practice. 

Having organized our bank, we can now revert to our friend, 
Bill Jones. In his district there are perhaps about 100 tenant 
farmers. They get in touch with the new bank. They are ad- 
vised, as a first step, to organize a national farm loan associa- 
tion under the Federal Farm Loan Act, and thus secure half 
of the money needed to buy their farms. As a second step, 
they are advised to organize themselves into another coopera- 
tive association — let us call them the Pioneer Farm Owners' 
Association. The third step is for the members to make ap- 
plication for loans through their association, each member 
buying one share of the common stock of the bank. The par 
value of each share shall be the same as the amount borrowed, 
five per cent to be paid in cash and the balance on call. The 
shares shall be elastic, their parity increasing or diminishing 
as the holder's indebtedness is increased or reduced. Loans 
are to be secured by second mortgages, repayable by amortiza- 
tion, with interest at six per cent. 

Although, as the operations of the Jewish Agricultural and 
Industrial Aid Society clearly show, losses even on substand- 
ard mortgages are negligible, it is obviously necessary, if our 



186 MARKETING AND FARM CREDITS 

bank is to be a paying institution, to surround these mortgages 
with sufficient safeguards to eliminate all losses, so that not 
only will there be no impairment of capital, but there will be 
adequate provision for expenses and dividends. This is to be 
accomplished through a system of reserves — three in number — 
and a sinking fund, to-wit : 

1. Primary Reserve: The interest rate, as we have 
seen, is to be fixed at six per cent and the dividends 
at four per cent. This gives us a margin of two per 
cent. One per cent should be quite sufficient to cover 
expenses. The other one per cent is to be set aside 
as the Primary Reserve fund for meeting losses as 
they may occur. 

2. Secondary Reserve: The five per cent paid by the 
members on account of their shares, shall constitute a 
Secondary Reserve fund, and shall be drawn on only 
after the Primary Reserve fund has been exhausted. 

3. Tertiary Reserve: In the event that the Primary 
and Secondary reserves are insufficient to cover the 
losses, the unpaid balance on the common shares shall 
constitute the Tertiary Reserve fund — a final reserve 
to be assessed against in proportion to their parity, 
that is, the unpaid balance of the holder's indebted- 
ness. 

4. Sinking Fund: Should the reserves first named be 
more than sufficient to meet losses, the surplus should 
go into a sinking fund, "When a member's interest in 
the sinking fund, and its accumulations, shall reach 
parity — be equal to his indebtedness — the indebted- 
ness shall be cancelled, his share retired, and the 
member relieved from all further liability. 

Landschaften For Insolvent Farmers 

The system of reserves I have here outlined, is in a limited 
degree, the system of collective liability in use by the Land- 
shaft, which has met with such success in Germany and other 
European countries. While I do not consider the Landshaft 
system as at all feasible for the solvent farmer, and consist- 
ently opposed its adoption in the rural credits legislation in 



LEONARD G. ROBINSON 187 

this country, it is, to my mind, not only practicable but highly 
desirable in dealing with the insolvent farmer. 

Bill Jones, the tenant farmer, is taken here for the simple 
reason that it is much easier to deal with him, because his per- 
sonal qualifications and adaptability to farming have already 
been demonstrated. Besides, our first duty is to the 
farmers in this country. But the same principles will 
apply in dealing with would-be farmers and landless men, 
natives and immigrants, who are qualified and willing to asso- 
ciate themselves and assume collective liability for one an- 
other. 

Amount of Capital Required 

What should be the capital of this bank? All I can say is 
that the capital should be large. With an initial capital of 
$10,000,000, and with the Federal Farm Loan system and 
other available agencies carrying the primary liens, approxi- 
mately 5,000 families — at an average of $2,000 per family — can 
be satisfactorily established, and out of the repayments on the 
original loans, more families can be added each year. The in- 
come on an initial capitalization of $10,000,000, or even $5,000,- 
■000, should — with loans made at six per cent — be ample to cover 
all costs of administration, make provisions for losses and re- 
serves, and leave enough to pay a four per cent dividend on 
the preferred stock. 

As I have stated, this is not the time or the place to go into 
the complex details of organization, administration, and oper- 
ation of this bank. What I have attempted to show is that the 
insolvent farmer is, to all intents and purposes, in no better 
position today than he ever was. I have endeavored to set 
forth the guiding principles that are essential to the solution 
of this problem. I have outlined briefly a plan to make these 
principles operative. I firmly believe there is enough vision 
and imagination, and enough public spirit and enlightened self- 
interest, in this country to solve the problem of the insolvent 
farmer along rational business lines, a>nd to make the Agrarian 
Bank of America a four per cent philanthropy combined with 
■one hundred per cent business. 



MARKETING OF LIVESTOCK. 



E. L. BURKE 191 



WHY INVESTIGATE THE LIVESTOCK INDUSTRY? 

E. L. Burke* 

It is only four years ago that, through the efforts of Col. 
Frank P. Holland, Mr. Charles W. Holnian and some other 
far-sighted and public spirited men, you held your first Con- 
ference. Four years is a very short time in which to make 
much progress in the study and solution of the great economic 
problems of this generation; they are much more complex and 
difficult than they were in the days of our fathers and grand- 
fathers. But measured by what has been accomplished through 
your annual Conference since then, the period might well have 
been forty years instead of four. Fortunately for all of us, 
you have demonstrated that the producers can get together. 
In this time of concentration! of many of the most important 
industries in this country into the hands of a few men, it is 
only through cooperation on the part of the producers that 
either they or the public can be protected, and the problems 
involved solved for the general welfare of the country. In Mr. 
Holman's foreword regarding this Conference, he stated that 
the time for generalities had passed and that you were ready 
for the definite and specific ; in other words, action, not conver- 
sation, is in order. 

Importance of Meat Industry- 
It would be superfluous for me to enlarge on the supreme 
importance of handling the meat supply of the Nation on the 
best economic basis possible. As to its relative importance, the 
United States Department of Commerce ranks the slaughtering 
and meat packing interest the largest single industry in this 
country. I believe that I can safely assume that this Conference 
is chiefly concerned in the economic welfare of the Nation and 
that any movement which promises progress in that direction, 
will have its moral and financial support. 

* Mr. E. L. Bui-ke, of Omalia, Nebraska, is a prominent cattle pro- 
ducer and feeder, and member of tbe market committee of tlie Ameri- 
can National Livestock Association. 



192 MARKETING AND FARM CREDITS 

I have the honor to be one of those who, at the meeting today, 
will represent the American National Livestock Association, 
a producers' organization which includes in its membership most 
of the leading cattle producers west of the Missouri river, be- 
sides having affiliated as associate members, nearly all the lead- 
ing state livestock associations of the country. This association 
is big enough and liberal enough to look at things in a broad 
way, and if I were to attempt to express what it stands for in 
a few words, I should say: The economic and industrial welfare 
of the livestock producers. It is hardly necessary to state that 
it is one of the oldest, best managed and most powerful associa- 
tions in the country and in the past has accomplished wonders 
for stockmen along constructive lines, through the untiring 
efforts of its very efficient officers and members. 

Fighting for Free Markets 

I shall not dwell on the achievements of the association in 
connection with railroad rates, sanitary service, land legislation, 
the livestock markets and along many other lines. It has always 
been a tower of strength in behalf of the producer and a bul- 
wark in his defense. I wish to call your attention to what I 
consider the most important, as well as the most significant 
clause in its constitution, Article II, Paragraph 3 : 

"One of the objects of this association is: To secure 
to livestock men the widest, best and most competitive 
market possible for their products, and to this end 
to prevent combination and monopolies ; and to secure 
such regulations by national and state laws as will best 
secure an open, fair and unrestricted market; and to 
promote the extension of our trade with foreign coun- 
tries in livestock and its products, so as to give us 
access to the markets of the world." 
At the annual meeting of the association at El Paso last 
January, we were confronted with a problem demanding solu- 
tion, which had been growing more and more insistent each 
year. It was the question of unfair conditions at the livestock 
markets and the remedies therefor. That brought us face to 
face with the packers. You will hear later regarding their 



E. L. BURKE 193 

dominating influence over nearly all the facilities at the market 
centers. You already know of the rapid concentration during 
the past 20 years of the buying power into the hands of a 
few large concerns ; and on the other hand the tendency towards 
smaller and weaker units among the producers. You also know 
of the very unsatisfactory conditions that have prevailed for 
years at the market centers and that conditions had steadily 
been growing Avorse, until in 1914 and 1915 a crisis was reached. 
And right here let me sound a note of warning. Do not be 
lulled into a sense of security by the high prices which have 
prevailed for the past few months. They are merely temporary, 
and produced by war conditions. The present demand for all 
classes of food products is artificial and unprecedented. On 
the return of normal conditions in this country, our old troubles 
will return to plague us, unless we now take the proper steps 
to apply the remedy. 

No Malice Against Packers 

Turning back a year, w^e find on the one hand the beef pro- 
ducers, on account of their enormous losses and the unusual 
hazards were preparing to quit the business by the thousands, 
while the large packing concerns were making the greatest 
profits in their history. We wish them well, but we demand 
that they play the game fairly. "We shall view with disfavor 
enormous profits if made by unfair methods. The situation at 
our meeting appeared to be loaded with dynamite ; it was 
certain that if we opened up the question, that the packers 
would endeavor to shift the responsibility for the deplorable 
conditions on to other branches of the industry. Many were 
fearful that agitation would decrease consumption and react 
for lower prices ; others feared the iron fist of the packers. 

American National Takes a Hand 

But true to its traditions, and the spirit of its constitution, 
the American National Livestock Association had the courage 
to tackle the problem and appointed a market committee of 
five men: Mr. H. A. Jastro, Bakersfield, Calif ornia ; Mr. E. L. 
Burke, Omaha, Nebraska; Mr. A. E. de Ricqles, Denver, Colo- 
rado; Mr. J. B. Kendrick, Cheyenne, "Wyomang; and Mr. I. T. 



194 MARKETING AND FARM CREDITS 

Pryor, San Antonio, Texas, and gave them instructions to 
investigate the unfair practices at the livestock markets and 
devise remedies therefor. 

Past Investigations Inadequate 

There has recently been distributed by the United States 
Department of Agriculture, a report in five parts entitled ' ' The 
Meat Situation in the United States". The committee ap- 
pointed to consider the economics of the meat situation con- 
sisted of six men of the highest standing, prominent in agri- 
culture and livestock, with Dr. B. F. Galloway, assistant secre- 
tary of agriculture, as chairman. After over 18 months of 
investigation and study, they did not make any formal report 
giving their conclusions and recommendations, but were con- 
tent to let the specialists publish their individual findings. 
One of the specialists, Mr. Louis D. Hall, whom you are to 
have the good fortune to hear, said in his report: 

"Some of the weights and prices could be secured 
only indirectly through the courtesy of the packers 
and meat dealers concerned, and although they are 
believed to be substantially correct, they must be re- 
garded only as results of preliminary investigations 
on this complex subject." 
Again he says that : 

"Abnormal conditions created by the European war 
and the epidemic of foot and mouth disease, both of 
which occurred during the progress of the investiga- 
tion, curtailed the work that had been planned." 

Need of a Real Investig"ation 

The questions of monopoly and remedies along constructive 
lines stand just where they did before this investigation. Could 
there be a better demonstration of the need of an investigation 
by a commission clothed with proper authority, with construct- 
ive remedies for its ultimate object, in cooperation with prac- 
tical livestock men! The United States Department of Agri- 
culture has signified its willingness to help the Federal Trade 



E. L. BURKE 195 

Commission in the work. Such an investigation would bring 
results of lasting benefit. 

In our study of the question, we not only had an economist 
prepare charts showing the relationship between receipts, prices 
of live cattle at the markets and prices of carcasses at wholesale, 
but Mr. de Riqles also prepared tables and charts bringing 
out graphically many important facts. While we have not been 
able to come to final conclusions, mostly because of the lack 
of sufficient reliable data and the magnitude of the task, we 
have gone far enough to feel reasonably certain that in addi- 
tion to the natural economic forces, artificial forces are at work. 
"We have endeavored to keep an open mind, to misjudge no one. 
Even if we were in a position to secure all the data to reach 
a definite conclusion, we know it would not be accepted by 
either the packers or the consumers, as it would be considered 
ex 'parte. We, therefore, concluded that before much perma- 
nent constructive work could be done, a careful investigation 
of conditions by some impartial tribunal like the Federal Trade 
Commission, and a report as to the proper remedies, was neces- 
sary. The commission was created for just such work, and it 
is the only body properly organized for it. They have the power 
to administer oaths, subpoena witnesses and compel production 
of books and papers, which the department of agriculture has 
not. It therefore seemed best to ask Congress to direct the 
Federal Trade Commission to proceed with the investigation 
and we supported a resolution to that effect and spent muoh 
time and effort in conjunction with other producers' organiza- 
tions and the National Livestock Exchange to that end. We 
argued if there was nothing wrong with the system, that there 
was nothing to conceal, and that every one would welcome an 
investigation for the sake of a clean bill of health, the packers 
most of all. 

Packers Oppose Investigation 

Strange as it may seem, we met thei^ determined and power- 
ful opposition. I shall pass over the details of the contest; 
suffice to say that they were strong enough to block us tempo- 
rarily. We have done our utmost to show them that it is for 
their interest as well as ours to have such an investigation as 



196 MARKETING AND FARM CREDITS 

we propose, allowing the Federal Trade Commission to go as 
deeply into tlie producing end of the business as may seem 
necessary for a thorough understanding of the subject. An 
authoritative statement from the Federal Trade Commission, 
after a thorough investigation, would furnish a basis on which 
every branch of the industry could cooperate in building for the 
future, and would not only restore the confidence of the pro- 
ducer in the industry, but would also clear up the situation in 
the mind of the consumer and result in increased production 
and a greater demand for meat. It seems difficult for the pack- 
ers to understand that this agitation on the part of both pro- 
ducers and consumers will never be silenced until the economics 
of the livestock market and meat situation have been thoroughly 
investigated, and if conditions are found unsound, the proper 
remedies applied. No half-way measures, no correcting of 
minor abuses which prevail at the livestock markets (important 
as it is to correct them) will divert the producers from the main 
point at issue. 

There are some big and fundamental questions to be answered, 
and one of the most important is, whether these men are main- 
taining a practical monopoly of the meat business in the coun- 
try; on the one hand dictating the price paid the producers, 
on the other the cost to the consumer. 

Another is: How are we going to broaden and deepen the 
channels of distribution? 

Secretary Houston has truly said that "production waits 
on distribution." But what is the use of increasing production 
if certain interests can block the flow in the channel leading 
from producer to consumer? Increased production would ren- 
der control just that much easier. 

The elimination of waste is another important question, but 
still more important is the devising of a way to prevent all 
the saving of waste from being absorbed by any one interest. 

Answering the Packers' Advertisements 

How silly it is for one of our largest packers to advertise 
that they no wise control prices because they do not produce 
or control the production of raw materials. Neither do the 



E. L. BURKE ■ 197 

speculators in grain or cotton produce the raw materials or con- 
trol their production, but it is a well known fact that the}'^ often 
control the price, sometimes injuring the producer, sometimes 
the consumer, and that, too, in markets which have the benefit 
of free and open competition. 

There are other questions which are pressing for solution. 
We want to know whether the present system of centralized 
livestock markets is the best and most economical one for the 
country. "Would it be less wasteful if there be decentralization 
and the livestock be killed nearer the source of production? 
These and others equally important can be satisfactorily an- 
swered only by some impartial tribunal clothed with the proper 
power and provided with sufficient funds to do the work thor- 
oughly. Their verdict would carry the weight of authority 
and impartiality. Congress can provide us with sUch a tribunal 
and funds. By experience we have learned, as have many 
before us, that Congress does not respond to sectional demand. 
We can get legislation on this matter only when the livestock 
and farm interests publicly and aggressively manifest interest 
in the work. 

We need the financial support of the various organizations 
represented at this Conference, and we must have their support 
at Washington. The average congressman from the agricul- 
tural and livestock belt must understand that his constituents 
are for this investigation and that a great and lasting good 
will result. 

Packers Control Market Prices 

We wish to present this subject to you from the standpoint 
of conservative and practical men. Personally I have been in 
the business of producing beef and pork for about 30 years. 
We market annually at Chicago and Omaha large numbers of 
fat cattle and hogs, and through personal contact with the buy- 
ers and commission men I have had exceptional opportunities 
to study the conditions. I have given you the conclusions that 
I have been inevitably forced to accept as a result of my own 
experience, conclusions which I reached with the utmost reluc- 
tance, for who is there who would not wish to believe every 
branch of his own industry clean and above the suspicion of 



198 MARKETING AND FARM CREDITS 

unfair practices? Fortunately we have men here who can 
and Avill present this subject to you from different angles. Men 
who have spent the best part of their lives raising cattle on the 
ranges of the West, and who ship them every year by the 
thousands to the leading markets. Other men who breed in 
Texas and Arizona and who are qualified to speak with author- 
ity as to conditions in the Southwest; others who represent the 
selling interests, and who know every crook and turn of the 
methods employed at the markets. 

We also have with us the principal executive officers of the 
American National Livestock Association, who are, above all, 
practical men, and desirous of constructive results. These men 
can and will present this subject to you much more convinc- 
ingly than I can hope to do, from an economic as well as a 
practical standpoint. As evidence of their sincerity, in order 
to attend this meeting, they have come long distances at great 
loss of time and money. They have a message for you which 
it will be well worth your while to carry home. 

Again let me earnestly urge your active cooperation in the 
solution of our problems. Get in touch with your representa- 
tives at Washington and urge them to help us secure the inves- 
tigation. Preach the gospel among your neighbors at home; 
keep in touch by correspondence with our market committee, 819 
Seventeenth Street, Denver, Mr. A. E. de Eicqles, secretary, and 
give us your financial support. We shall be busy at Washing- 
ton this winter, we hope with the packers' cooperation. But we 
shall be busy just the same, and shall need your support. 



EDWARD C. LASATER 199 



THE LIVESTOCK INDUSTRY AND THE 
NATIONAL WELFARE 

Edward C. Lasater * 

I have attended this your fourth annual Conference with 
much interest^ and I think I have been able to gather a good 
deal of useful information. I was particularly interested in 
the discussions that have taken place here on rural credits and 
financing the farmer. I would like to make this statement 
now, that the influences of this Conference and other agencies 
should enable the American farmer to reach the ideal condi- 
tions, that is. put him on a parity with the most favored farm- 
ers of Europe in that respect. It would enable your farmer 
to produce about 20 per cent cheaper than he is today produc- 
ing. In other words, the food supply of this country would 
be produced at about 20 per cent less cost. 

Now under the conditions as we have them, the American 
farmer would be in a better situation if that entire 20 per cent 
could be transferred to the consumer ; but if we stop where we 
are should we succeed in placing our farmers in the most fa- 
vorable financial situation and stop there, you would have 
brought no benefit to the farmer and none to the consumer, 
because our system of distribution in this country has been 
shown to be the most wasteful of any one of the modern na- 
tions. Now I would like to say here that I am going to present 
my ideas only. There is no association or no class responsible 
for them in this discussion. 

The question of the marketing of livestock so that fair value 
may be returned to the farmer is one of vital importance to 
this Nation. To avoid becoming too serious, I am going to 
commence this talk with a quotation from "Life." Life said, 

* Mr. Dasater lives at Falfurrias, Texas, on a ranch of 650,000 acres, 
which he owns. He produces not only beef cattle but Jerseys, having 
the largest herd of Jerseys in the world. He has occupied a promi- 
nent position in the cattle industry for several years and was once 
president of the Cattle Raisers' Association of Texas. His figures on 
the cost of producing range cattle are considered authoritative. 



200 MARKETING AND FARM CREDITS 

' ' A government is an organization that can build worships but 
not peace ships ; that can distribute mail but not express mat- 
ter j that can build canals but not railways; that can give away 
valuable rights, but can never get them back ; that can run navy 
yards but not stockyards." Since this quotation appeared in 
Life, our national government has disproved the statement on 
three of the five points made: witness the parcel 'post, the 
Alaskan railroad, and the merchant marine bill. This leads 
me to hope that the law of the jungle, "Every man for himself 
and the devil take the hindmost," has ceased to operate in the 
subconsciousness of the Nation as a basic principle upon which 
to build legislation, and that the greatest good to the greatest 
number is now the controlling motive. This "would indicate 
that we are beginning to think and act for the common people. 
Lincoln said, "The Lord must love the common people, he has 
made so many of them." 

"When the producer of a commodity has to take his product 
to a market where the influence of the buyer absolutely dom- 
inates, — owning the stockyards; landlord of the commission 
men who handle the producer's commodity; owning the bank 
facilities that many of the commission men are absolutely de- 
pendent upon to grant accommodations to their clients; hav- 
ing a preponderating influence with the chamber of com- 
merce of the city in which the stock yard is situated, because 
he controls the largest industry in the city; and for the same 
reason is catered to and deferred to by the local press, — can a 
producer expect to treat on terms of equality with the buyer 
under these conditions ? I will leave the answer of this to you. 

Importance of Private Control of Stockyards 

The question of privately-owned and packer-dominated 
stockyards is of more vital importance to this Nation than the 
question of whether a navy shall be built and equipped at gov- 
ernment-owned or privately-controlled ship-yards and munition 
factories. The one has to do with the cost of the defense of 
our national honor and rights ; the other has to do with whether 
or not there is to be anything worth defending. 

I make the statement that our Nation's future depends upon 
livestock production being made profitable to the American 



EDWARD C. LASATER 201 

farmer, and assert that, on the average for the past 25 years, 
it has not been profitable. Without an increase of livestocl: on 
our farms, we cannot maintain the fertility of the soil.^the 
one thing essential to our future greatness as a nation. Are 
we equal to learning from the page of history, or must the 
bitter experience of nations that have passed into oblivion be 
ours ? 

Why Nations Have Decayed 

The world has staged the rise and fall of many mighty na- 
tions. The Eomans for generations occupied the stage as 
world rulers. In road building, city erecting, commerce cre- 
ating, law making and law enforcing, I question whether their 
record has been excelled by any nation up to the present time. 
As time is measured, they occupied the stage but a brief span 
and passed on. Why? The Romans, from a nation of farm- 
ers, became great in war, wealthy in commerce and seemingly 
"wise as law givers. 

Were they? In the commencement of their power, the 
Romans were in possession of fields, tilled by their owners, that 
yielded more than 30 bushels per acre of plump, strength- 
producing grain; grain that nurtured a people so well that 
they became the masters of the world. When the scepter of 
power passed to other peoples, what was the condition of these 
same fields? Their returns were less than three bushels of 
shrivelled, chaffy grain to the acre. 

Why this astounding change? As the wealth of the nation 
increased, the Romans became money and power mad. Coun- 
try life, country pursuits became too slow. The dominating 
element of the population congregated in cities, leaving the 
farms to be tilled by hired and slave labor ; instead of farming, 
they mined their soils. And so Rome as a nation ceased to be. 

Will America Learn from the Romans? 

Are we Americans intelligent enough to profit by the ex- 
perience of the Romans? Do we not see here a parallel to 
what has taken place in America during the past 50 years, 
an exodus of the intelligence from country to urban pursuits, 
the renter taking the place of the farm owner? But yester 



:-'// 



202 MARKETING AND FARM CREDITS 

day, as the lives of nations are measured, our fathers took pos- 
session of a continent prodigally endowed by nature with soils, 
forests, minerals and climatic conditions favorable to the needs- 
and welfare of man. We have been told by our politicians for 
more than a century, and every good American wants to be- 
lieve it, that the}' instituted a government "the most benefi- 
cent ever devised by the mind of man." 

"What have we done with our advantages? We have girded 
our continent with great transportation systems that liandle a 
greater commerce than any other nation ever created, at a less, 
cost per ton mile than any other system of land transportation 
ever operated by man. We have created a banking capital al- 
most equal to that of all other modern nations. We have builded 
many cities and in these cities erected buildings Avhose roof gar- 
dens look down upon any cities ever built by any other people. 
What else have we done? While yet an infant, as nations are 
judged, we have destroj^ed a large per cent of our soil fertility, 
that one possession which should be nursed by all peoples as a 
priceless heritage to be handed down to future generations, be- 
cause, as a man is fed so is he, and the food supply of the nation 
depends on the maintenance of the soil fertility. In a day, as 
it were, we can rebuild cities. Recall San Francisco and Gal- 
veston. Blot out whole manufacturing centers and you have but 
caused an inconvenience to a. nation. But bring down your soil 
fertility to a point where the farm worker cannot produce re- 
turns on a parity with the earnings of the urban population and 
thereby sustain the ideals of expenditure that have been incul- 
cated in him, and your nation has been overtaken by a national 
catastrophe, a catastrophe so great, so all-pervading that it will 
take generations of national toil and deprivation to overcome. 

A nation can be great and grow gTeater Avithout millionaires, 
— without palaces, but it cannot even exist unless it has the home 
surrounded by fertile acres that will yield to the husbandman 
returns sufficient to enable him to surround the dear ones nested 
there with all that is necessary for their mental and physical 
well-being. Up to now, by cashing our soil fertility, we have 
been able to disregard all laws of political economy. We have 
kept the balance of trade in our favor by selling the nations of 
the earth our raw materials at less than it costs to produce 



EDWARD C. LASATER 203 

them, soil fertility considered. Sound farm economics demand 
that grains and cotton seed products be converted on the farm 
into higher priced food products, such as. meat, milk and butter,, 
instead of contributing to the making of such products in for- 
eign countries. In the one instance we maintain our own fer- 
tility; in the other we build up the fertility of the foreigner. 

Why Livestock Production Is Decaying 

The history of the livestock production for the past 25 years 
proves that unless our farmers can command non-packer-con- 
trolled markets for their livestock and unless the unfair com- 
petition of the Chicago packer can be controlled and eliminated, 
we cannot increase the production of our livestock on our farms, 
— the one thing essential to the maintenance of soil fertility, 
that factor so necessary to the retention of the virility of our 
nation. The Chicago packer has been an intelligence as cold, 
pitiless and penetrating as the north wind fresh from its frozen, 
wastes. Before it stands a nation of farmers, bewildered, be- 
numbed, dreading, questioning. We ask that this convention of 
representative Americans assist in having a governmental in- 
quiry made into the cost of production of livestock and the mar- 
keting of all products therefrom, so that this industry, so vital 
to our welfare, be saved to our Nation while yet there is time. 

In our short life as a nation, we have exhausted more than 
twenty-five billion dollars worth of fertility, a sum greater than 
the combined value of all our transportation lines and of all our 
manufacturing plants. This means that we have even now ex- 
hausted more than one-half of the fertility the Creator bestowed 
upon our continent as the rightful heritage of unborn genera- 
tions. 

Immediate Investigation Essential 

It has been said that a nation's civilization can be measured 
by its interest in posterity. If this generation would prove its 
civilization and bring about conditions that will restore to our 
soils, with careful husbandrj^, that which we have so recklessly 
mined from them, we must have our Nation ACT NOW. As a 
nation we cannot tolerate the existence of an agency operating 
between the producer and the consumer, with the power to take 



204 MARKETING AND FARM CREDITS 

from both that to which it deems itself entitled. The individual 
livestock producer is as powerless to protect himself from the 
conditions that exist as is the individual consumer. We both, 
consumer and producer, ''the common people," whom "the 
Lord must love because he made so many of them," according 
to Lincoln, acting through a governmental agency, must have a 
thorough investigation of all problems that enter into the pro- 
duction of livestock; the marketing of livestock and the prod- 
ucts therefrom, so that livestock production, so essential in 
feeding our people, and in the restoration of soil fertility, be 
saved to our Nation. 

We, representing the livestock producers of our country, ask 
your assistance and cooperation toward bringing about an in- 
vestigation of this matter by the Federal Trade Commission, so 
that the people of our Nation may have an authoritative expose 
of the peril that threatens them, to the end that a cure may be 
provided and applied. 

Discussion of Cost of Producing Beef 

Chairman MeVey: I suppose there is no other man in 
America who has a wider knowledge of the actual cost of pro- 
ducing cattle than has Mr. Lasater, and the matter now is 
open to you for questioning. 

Mr. Simon Olson: I would like to ask this man a question, 
if he will put the cost of the production and rearing of cattle 
in days. If you can put the cost of growing cattle per day, if 
you will kindly put that so that the audience will understand 
it, per days? 

Mr. Lasater: He wants to know, as I understand it, the 
cost of carrying growing cattle per day. Of course, that 
would vary with practically every individual farmer. I can 
give you the cost, what it cost me this year to produce a year- 
ling steer under the conditions that I had to contend with this 
season. I have that here and I will state now that my ranch 
accounts were audited by Price, Waterhouse & Co., so there 
can be no question of their correctness. I can give you that 
information. 

Mr. Simon Olson: Let us have it. 

Mr. Lasater: I will state that this is one of our bad years 



EDWARD C. DASATER 205 

in Southern Texas. You may know that the runs to market 
were remarkably light this year, and for that reason my ex- 
pense account is somewhat heavier from a feed standpoint, 
and that necessarily follows from a labor standpoint also, than 
ordinarily. This year I had my ranch stocked up 20 acres to 
the cow. Each cow is valued at $56, and 20 acres of ranch 
land at $6 per acre gives a total investment of $176. Interest 
on the investment one year at eight per cent — I will state that 
is both the mortgage rate on lands in our section, also the 
banking rate on loans. I will submit this and whenever any 
business has to take a yield less than the banking rate of that 
section, when money is loaned only on good security and a 
man sits back and takes no other risk, practically speaking, 
that you at once must curtail production. That cannot be to 
the interest of the consumer. Interest on investment amounted 
to $14.08. Labor charges per cow 85 cents, repairs and im- 
provements per cow $1.63, camp supplies per cow 53 cents, 
taxes on land and cattle per cow $1, feed per cow $2.37. That 
was in addition to the pasturage. That is 55 cents higher 
than the average year. 

Mr. Olson : What is the total ? 

Mr. Lasater: Two dollars and thirty-seven cents expense 
moving cattle. I had to move part of my herd. I moved one- 
third, some 200 and odd miles to grass, and then returned them 
back to the ranch at an average cost of 93 cents. That of 
course is figured on the entire number of costs on the ranch. 

Mr. Olson : How big a herd ? 

Mr. Lasater: About 10,000 cows. I moved something over 
3.000 cows and about 1,100 of the larger calves that I weaned 
and fed some on the grass I moved them to. 

Mr. Olson : What is the value of the land these cattle run 
on? 

Mr. Lasater: Six dollars per acre is the estimated value 
of the land. Depreciation on improvements per cow 28 cents- 
Overhead, office salaries, per cow, 10 cents. Death loss per 
cow at three per cent, $1.68. Cost of bull service per cow 
44 cents. Cost of producing a yearling steer on the basis of a 
100 per cent calf crop $23.89. Cost of carrying 40 per cent 
of non-productive cows $9.56. Cost of a yearling steer on the 



206 MARKETING AND FARM CRiEDITS 

basis of a 60 per cent calf crop $33.45. My actual calf crop 
this year was about 60 per cent. Ordinarily it will run around 
70 or better than 70. 

Mr. Olson : That would be a trifle less than 10 cents a day, 
10 cents per day for growing your yearling? 

Mr. Lasater: Yes, that would figure about that way, 365 
days in a year. 

Mr. Olson : In our locality we grow our cattle up to the age 
■of three years, our average cattle, and they sell around $55 
per head. That is from three years old and over. They 
average about $55 per head and that would give us the average 
cost of growing and furnishing the feed and labor in connec- 
tion with the growing of the cattle at five cents per day. 

Mr. Lasater : Do you use government land, leased land, or 
do you own it? 

Mr. Olson : Own it. $100 an acre land in our locality. 

l\Ir. Lasater: You use your own land? 

Mr. Olson: Own land. 

Mr. Lasater: Do you figure interest on that, and at what 
Tate ? 

Mr. Olson : The critter the way I put it has not declared 
any dividend to the owner up to the age of three years, and we 
sell our cattle to the market and we on the average get about 
$55 for cattle three years old, that is taking heifers and steers 
and cows, and that would not give us more than five cents 
per day for furnishing feed and labor. 

Mr. Lasater: You mean, that is about what you get out of 
it, that is your return? 

Mr. Olson: Yes. 

Mr. Lasater : I have sold my crop for the past three years 
at $35. I sold my yearling crop three years back at $35. 

Mr. Olson: Per head? 

Mr. Lasater: Per head, yes, sir. 

Mr. Olson : You made two dollars and a fraction ? 

Mr. Lasater: Yes, over and above interest charged. 

Mr. Houston (Kentucky) : Mr. Lasater, is this the cost of 
a calf when weaned in the fall of the year, or in the spring fol- 
lowing as a yearling? 

Mr. Ijasater : That is my cost the spring following. Usually 



EDWARD C. LASATER 207 

our yearlings are delivered from April until June, and tliat 
would be the cost. The present calf crop will be delivered 
next Ma}' or June, and all my labor charges are figured in at 
that time. 

Mr. Durand (of Minnesota) : Will you state briefly about 
what part of that total cost is represented by interest on your 
land? It was something like $13, wasn't it? 

Mr. Lasater : The interest charge is $14.08. ' The value of 
the land is $120 and the value of the coav is $56. 

Mr. Dnrand: Was that the price you paid for the land, or 
the value at Avhich j^ou think you can sell it nowl 

Mr. Lasater : That is about the sale value of the land now. 

Mr. Durand : Exactly. Is it possible to make money on any 
ordinary agricultural pursuit if you figure interest on the pres 
ent selling price of the laud? Isn't it a fact that the selling 
price of the land depends on what you sell your products for? 

Mr. Lasater : I would sa}^ to a large extent it does. 

Mr. Durand: One can't expect to make a profit on the price 
of the land Avlien the price of the land depends on the profit. 

Mr. Lasater: Well, I would simply say this, that I don't 
know of any capital seeking investment anywhere in the coun- 
try that is not permitted to make a profit on the investment. 
For instance, you can .take any real estate proposition on which 
they loan the usual loan of about 60 per cent of the value. If 
you borrow 50 per cent of the value of your lands, and you 
agree to pay the insurance company or any lender, we will 
say, from five to eight per cent, certainly if you are going to 
get no returns whatsoever on the remaining equity that you 
may have in that proposition, why you can not afford to handle 
the borrowed money. 

Mr. Durand : If you could make say 12 or 15 per cent on 
the prices of the land, would not you immediately price up 
your land so that you never could make 12 or 15 per cent? 
In other "words, isn't it reasoning in a circle to try to figure on 
a price of your land which depends entirely on the profits? 

Mr. Lasater: I don't think so, because I don't think very 
many lands will be held anywhere in America, except in some 
outlying town where they may have a residential value, in ad- 
dition to production, I don't think they are going to be held 



208 MARKETING AND FARM CREDITS 

higher than what would be a reasonable per cent of their values. 

Mr. Durand: Isn't it generally assumed with most pro- 
-ducers that when the price of products go up that the price 
of land also goes up? 

Mr. Lasater: I am unable to say what is in the producers' 
minds, 

Mr. Durand : Don 't they adjust the actual price and future 
increase in productivity so as to have a speculative value on 
the land greater than its present productive capacity ? 

Mr. Lasater: That I am unable to answer. 

Mr. Durand: We find in Minnesota where I happen to be 
employed teaching agricultural economics, that no farmer can 
make five per cent or six per cent or any normal rate of in- 
terest on the price of his land, for if he could make it he would 
price up the land still higher, instead of expecting the price 
of land to go higher with the increasing price of agricultural 
products. It seems to be reasoning in a circle to try to figure 
profit on the price of land based on present market values 
which are based not merely upon the present earning capacity 
but on anticipated higher future earning capacity. 

Mr. Manss (of Maryland) : How does the speaker figure 
his land value? 

Mr. Durand: The way it is commonly figured is on the 
basis of the current selling price of land, the result being that 
they are unable to figure a profit. The correct principle, as 
I believe every economist in the country will tell you, is to fig- 
ure the price of the land at what you pay for it, and if you by 
good fortune thereby make a large profit you are that much to 
the good. If you bought it recently and at a high price you 
paid that high price partly for what you thought you would 
get out of the land this year and next year, but partly as a 
speculative proposition, assuming that the products going 
higher the land would go higher, and part of your profits 
would have to be figured from the increased price of land in 
current earning power. 

Mr. Faithhorn (of Florida) : What breeds are these costs 
based on? 

Mr. Lasater: Hereford and Durham. 

Mr. Stull (of Nebraska) : At the proper time I will bring 



EDWARD C. LASATER 209 

forward facts to show that the meat production of farm lands 
has been no factor at all in the advance in price. 

Mr. O'Dell (Chicago) : I would like to ask a question. Did 
I understand you to say you sold your yearlings at $35? 

Mr. Lasater: Yes, sir. 

Mr. O'Dell: What are those calves worth at breeding time 
in the fall? 

Mr. Lasater : As yet there has been no market in my sec- 
tion of the country to any great extent for that age animal. 
Usually we sell to people who want to carry them over to ma- 
turity. 

Mr. O'Dell: In my section of the country we sell at wean- 
ing time, and the price was so nearly that of yours I don't see 
how you could afford to carry over the yearlings. 

Mr. Lasater : You see J am something over a thousand 
miles from your section, and in my section of the country too 
I am south of what is known as the quarantine line. 

Mr. O'Dell: This particular section I speak of is in Colo- 
rado. 

Mr. Lasater : Gentlemen, I would like to make this further 
statement. The question has been raised here about the ad- 
visability of any further inquiry into marketing conditions. 
I think that is most essential, not only from the standpoint of 
the producer, but from the standpoint of consumers. Now, 
if the producers of any element that enters into production 
is getting more than a fair return for we will say his energy 
and capital used, I think the general public ought to know it. 
Now, if the waste is between the producer and the consumer, 
I think that fact ought to be established by certain inquiry 
as we propose. It must come from some authoritative source. 
Once locating the trouble I believe it is entirely practicable to 
find a remedy. 

Mr. Eossiter (of Utah) : I should like to ask how many 
months you pasture your cattle, and how many months you 
have them feeding. 

Mr. Lasater : As a usual thing we do not feed at all. 

Mr. Eossiter : You don 't feed at all ? 

Mr. Lasater : It is only the unusual conditions that we have 
to feed. 



210 MARKETING AND FARM CREDITS 

Mr. Rossiter: Your costs then here are for a year's pastur- 
age? 

Mr. Lasater : Yes, sir. 

Mr. Rossiter: What did you pay for your pasture? You 
own the land, you say, at $6 an acre ? 

Mr. Lasater: Yes, sir. I will state this. The feed con- 
sumed on the ranch this year was $2.37 per head. Now that 
is 55 cents more per head with the 10,000 cows than the aver- 
age feed costs. Every year we feed some small lots of cattle 
for the market. It may be of interest to the gentlemen here 
for me to state that I fed last year this same quality of year- 
lings when they were weaned in the fall, instead of turning 
them upon the pastures, I put them on concentrated feed and 
marketed them as baby beef. Now there were 182 head in this 
experiment that weighed on the market at Fort Worth 721 
pounds, and the average price per pound at Forth Worth was 
.091111 cents. Now, I had a feed bill on these steers of 
$30.25 and the labor on the bunch was $80. That showed a 
profit of eight dollars and some cents over the average year- 
ling steers. 

Mr. G. W. Stone (of Iowa) : What was the value of this 
land when you bought it and how long has it taken to come up 
to this $6? 

Mr. Lasater: Twenty years. 

Mr. G. W. Stone: What was the value of it when you got 
it? 

Mr. Lasater: It cost me from $1 to $3 an acre. 

Mr. Durand (of Minnesota) : I would like to ask one other 
question on the same line. If you were the manager of a cor- 
poration, say a livestock packers' corporation, would you fig- 
ure the rate of profit by dividing the market price of the capi- 
tal stock into the profits of the year? Or would you put in 
what the investment cost you as the basis for calculating your 
profits? 

Mr. Lasater: Well, that would depend altogether on how 
your plant had been kept up. There woidd be many factors 
that would have to enter into that. 

Mr. Durand: Did you ever hear of a corporation that at- 
tempted to figure its rate of profit by taking the market price 



EDWARD C. LASATER 211 

of the capital stock as the divisor, and dividing that into the 
annual earnings? 

Mr. Lasater: No. Usually the corporation that you are 
discussing, after charging off we will say depreciation, inter- 
est charges and so forth, after paying a reasonable dividend, 
then they pass so much up to surplus. 

Mr. Durand : Yes, but I don 't think that answers my ques- 
tion. 

Mr. Lasater: The only surplus any ranch I have been able 
to come in contact with in many years has ever carried at all 
would be what you might term the increase in real estate. 

Mr. Durand : That is the same increase in, the market price 
and capital stock, isn't it? 

Mr. Lasater : It is certainly similar, yes, 

Mr. Eliot (of Texas) : Mr. Chairman, the corporation has a 
plan of selling watered stock to take care of that increase. 
(Laughter.)* 



* Many discussions have had to be omitted on account of lack of 
space. 



212 MARKETING AND FARM CREDITS 

PRESENT STATUS OF LIVESTOCK INDUSTRY 

T. W. TOMLINSON* 

On behalf of the American National Livestock Association I 
wish to thank the officers and members of this Conference for. 
considering our problems. We think they are your problems. If 
you can aid us in settling this perhaps we may be able to point 
you to a better settlement of some of your other problems rel- 
ative to other agricultural products than livestock. I feel that 
I ought to apologize to this organization and to this most in- 
telligent audience for not having prepared my remarks in writ- 
ing in order that I might more concisely and pointedly refer 
to the various factors which I desire to discuss. But my ab- 
sence from Denver in the Northwest and multiple other duties 
and the lack of knowledge as to whether I was to be on the 
program is my answer to any criticism that might be made 
why I did not put my remarks in better shape. 

Rank of Nation in Livestock Production 

There may be some in this audience who are not fairly fa- 
miliar with the importance of the livestock industry in these 
United States, and I will try to give you in tabloid form a brief 
survey of the position of the United States as to the production 
of livestock compared with all other countries in the w^orld. 

We have in the United States approximately 60,000,000 to 
65,000,000 cattle, about 70,000,000 million hogs and 52,000,000 
sheep. 

We have more cattle than any other civilized country or un- 
civilized country. 

The number of hogs in the United States is probably as great 
if not greater than the number of hogs in all other civilized 
nations on the globe, excluding only China. 



* Mr. Tomlinson is the veteran secretary of the American National 
Livestock Association, with headquarters in Denver, Colorado. He 
has a familiarity with the problems of more stockmen than perhaps 
any other practical man. His findings and views cannot fail to he of 
importance, and thought-promotive. 



T. W. TOMDINSON 213 

Our sheep population is only exceeded by Argentina and 
Australia. 

According to the meat economists of our federal government 
there are annually produced approximately 60,000,000,000 
pounds of meat products. Of this amount the United States 
produces only 19,000,000,000 pounds. We produce in this 
country in general terms approximately one-third of the meat 
products in the entire world. Livestock and the meat industry 
in the United States has been the backbone of our prosperity. 
It has paid the great international trade balances which we 
owed to foreign nations due to our being a borrowing nation 
in the earlier stages of our national life. 

For many years we exported approximately $250,000,000 
worth of livestock and meat products. Through the exporta- 
tion of this vast volume of meat products we repaid those coun- 
tries that had advanced money in earlier years. During the 
present year we will export, if the figures of the department 
are to be relied upon, approximately $300,000,000 worth of 
meat products, and if all signs do not fail we will probably 
export as much next year. 

In addition to the maintenance of the fertility of our soil 
you can readily see that in this way livestock is and has been 
the backbone of our national prosperity, and it will continue 
to be if it is properly taken care of by our federal government 
and by those concerned in the industry. 

Why Increase Production When Prices Are Depressed? 

I think I can best illustrate the point which the members of 
the American National Livestock Association and our market 
committee have in mind as to some of the evils affecting the 
present marketing system by relating a concrete instance that 
came to my attention as to the livestock situation in the North- 
west. For a good many years the packers on the Pacific coast 
bought their cured hog products and live animals in what is 
known as the Corn belt, that is, in Kansas, Nebraska and on 
the Missouri river market, in North and South Dakotas and 
Minnesota ; and shipped them west for slaughter on the coast. 
Not a great many years ago one of the large interests at Port- 



214 MARKETING AND FARM CREDITS 

land, Oregon, owning the stockyards and a packing plant in 
that section started a campaign in the Northwest to raise more 
hogs 

They employed a man for that particular purpose and went 
through the country talking to farmers. He secured the sup- 
port of the agricultural and market bureaus in the Northwest 
and finally convinced the farmers in that section that their 
great and only salvation was the raising and feeding of more 
hogs. 

As a result of that campaign, which was joined in vigorously 
by these experiment stations and colleges, the production of 
hogs in the Northwest increased by leaps and bounds. Where 
formerly they obtained their supply in the Missouri river ter- 
ritory they were able to secure it in the nearby territory such 
as Oregon, Montana, Washington, Idaho, etc. The supply of 
hogs in that section probably increased ten-fold in many lo- 
calities. That was the situation in 1914. 

Along in September, 1914, hogs were selling, if I remember 
correctly, on the Chicago market at about $9.60. That was 
the high mark at some day during September. During Oc- 
tober there was a break as has been referred to of approxi- 
mately $1 to $2 per hundred pounds in the course of two or 
three days, and in the middle of December the top price of 
hogs on the Chicago market was $6.50 per hundred pounds. 

Now, what happened in the Northwest? People in Idaho, 
for example, had to sell their hogs to the buyers in the country 
at from four to four and one-half cents per hundred pounds, 
less than the cost of production. A good many of them went 
out of the business. I was talking only a few days ago with 
the president of the Northwestern Livestock Association who 
lives at Grangeville, Idaho. He said that at least 25 per cent 
of the people who were formerly in the hog business, who had 
been prevailed upon to go into the business, had quit and would 
not go back; that of the remainder the large majority were 
only keeping a few for breeding, and that possibly not over 
20 to 30 per cent were feeding or raising their full quantity of 
hogs. The situation in the Northwest today is that the packers 
in the North Pacific coast region will have to come to the Mis- 
souri river valley to get their supply of hogs. 



T. W. TOMLINSON 215 

Now who benefits by this procedure? 

AVhat I have said may not point a moral or adorn a tale,- but 
it shows pointedly I believe the strong-armed tactics of some- 
body in putting the price of hogs down below cost of produc- 
tion. These people went out of business and are going to stay 
out of it for the simple reason of the uncertainty of the busi- 
ness, the unstability of prices and lack of assurance- that they 
will get a living wage or any wage when they mature their crop 
of hogs. 

Why Consumers Should Be Interested 

The consumer is interested in that proposition. Prices have 
now ascended to a high level. In the Northwest the price of 
top hogs is higher than it is in Chicago. I was in Winnipeg 
about 10 days ago and hogs were selling on the Winnipeg 
market from 11 to 12 cents, considerably higher than on the 
American markets even as far east as Buffalo. They are sell- 
ing higher in Calgary, they are selling higher in Seattle and 
Spokane than they are on the Chicago market, and they are 
selling at that price simply and solely because some one pushed 
the price down below the cost of production. 

Mr. deRicqles tliis morning showed some very interesting^ 
tables of our exports, and if you will recall those tables you 
will remember that during this period to which I have referred 
there were immense exports of hog products, more exports than 
the increased volume of marketing. Therefore, there was no 
market surplus pushing on the consuming markets in this 
country. Indeed there was a less surplus pushing on the con- 
sumption in this country than in previous years, and yet the 
price went down. 

Our association is not unmindful of the great benefits that 
have flown to the livestock industry through the operations of 
the great packers of this country. It was only through the 
medium of the great concerns, such as represented by Mr. Swift 
and Mr. Armour and Mr. Morris, that we were able to build up 
our phenomenal export trade and to pass to foreign countries 
the immense surplus we had in earlier years. We are grateful 



216 MARKETING AND FARM CREDITS 

for their support in that respect, but we do feel now that their 
grasp on the prices on the different markets is such as to have 
a baneful effect upon our industry, and this illustration that I 
make about the hog prices I think points the moral as well as 
any statistics to which I could refer you. 

Packers Have Supreme Power 

Now, this instance is not an isolated one. I could go back to 
other years and show the same condition as it refers to cattle 
and as it refers to sheep. Numerous instances can be related 
by any practical stockman throughout the country. We believe 
the power that was able to put down the prices of hogs — and I 
could as well say of cattle — despite the large exports, despite 
the fact that our consuming demand was up to normal, is 
a power that bodes great ill to the livestock industry. It is 
a power which I think the packers should shrink from exer- 
cising. 

Put yourself in the position of a packer. If you felt that 
you could control the markets at advantageous times would 
you buy products higher or lower? Would you not shrink 
from exercising that power even if you possessed it? The 
packers may be victims of their own expansion. They are 
most admirable gentlemen. They are like us, working for the 
best they can for themselves, and if we were in their place per- 
haps we would pursue the same methods that they have adopted. 

It is our belief that a thorough investigation of this problem 
through the medium of the Federal Trade Commission may 
result in the recommendation of certain reforms or remedies 
that can be put into effect either through conferences or through 
the machinery of our federal government. 

How the Independent Packers Lost Out 

If you have followed the annual reports of the great packing 
concerns of this country you have noticed that they have made 
a large amount of money in recent years, legitimately, no doubt. 
Probably it may be because of their intense systemization of 
their work and their utilization of their products, but it may 
also seem strange to you that other independents have not em- 



T. W. TOMLINSON 217 

barked into the packing business if it promises such great re- 
turns as these large packing industries have undoubtedly made. 
It is an alluring prospect, but there is a reason why there are 
not more independents throug'hout the country, and that is one 
of the factors we want investigated. 

I dislike to refer you to ancient history but most of you will 
remember that during the time 10 or 15 years ago all great 
shipping institutions like the packers received large rebates and 
in that way had an advantage over the small man. It has 
been rumored, and creditably believed in certain instances that 
the packers as well as other large industries did attempt to 
defeat independent competition by lowering their prices at 
certain distributing points so as to drive out all business of 
independents. Whether that exists today or not I do not know. 
I hope it does not. 

Still the fear exists in the minds of all who might contemplate 
going into the business, the fear that if they did invest their 
money some large competitor might see fit to come into their 
particular locality and drive them out of business, and that 
is the reason why so many who would like to go into the in- 
dependent slaughtering business are deterred from doing so. 
We believe an investigation of that by the Federal Trade Com- 
mission will be productive of great good; that as the result of 
such a commission carefully watching after unfair competition 
such as that will insure these independents fair treatment, and 
that therefore they will be encouraged to go into the business. 

Need of Plants Closer to Producing Regions 

There is no rhyme or reason in livestock being shipped from 
the country into the market and the finished prodlict being 
shipped back. There is an economic loss in that which ought 
to be saved to the consumer and to the producer and which 
could be shared under semi-ideal conditions as to slaughtering. 
If there were more independent plants or municipal abattoirs 
there would be less stock come into the market, probably less 
opportunity to depress prices. The unstability of livestock 
prices in this country today is the great baneful effect of this 
centralization of packing interests in the great markets, and 



218 MARKETING AND FARM CREDITS 

we believe it can be cured by more competition in the shape of 
independent plants in the various localities. 

Domination of Stockyards Companies? 

Not long ago I was talking with an officer of an independent 
stock yards in the Northwest and I referred to the instance of 
our talk simply to illustrate the packing company control of 
stockyards. He said the big packer at his point wanted 51 
per cent of the stock in that stockyards company. They de- 
clined to give it to him and he used all the machinery of all 
the banks in that section of the country to compel them to dis- 
gorge and give him the percentage he wanted. 

Fortunately that particular stockyards was able to resist 
these attacks upon them and the packer did not succeed. 
However, he did insist, and he did not get that either, he did 
insist that the commission men on that market should give him 
the first and last chance on all livestock. In other words, he 
demanded that he should have a little the best of all the other 
buyers because he was the large buyer on that market. Now 
that in effect illustrates some of the bad effects of the packer 
domination of these various stockyards companies. Mind you, 
I do not charge that the packer control of stockyards has been 
abused in the past, but the situation is that it can be abused 
and it is too great a power to lodge in the hands of a few men. 

Garfield Report Now Ancient Document 

Reference was made this morning to the Garfield Report, 
and why, and why inasmuch as that report had been made we 
wanted another federal investigation. You will remember that 
the Garfield Report was made many years ago, in 1904, I be- 
lieve. Conditions have materially changed since then. The 
stockmen did not cooperate in that investigation. We did not 
have an opportunity to present our side. While I do not wish 
to impugn the accuracy of the Garfield Report, I believe I voice 
the sentiment of most stockmen when I say that they did not 
regard as satisfying the conclusions arrived at by Mr. Garfield. 

Now it it true that the United States Department of Agri- 
culture has created what is known as a market bureau, under 



T. W. TOMLINSON 219' 

the able administration of Mr. Brand and Mr. Hall, and they 
have been conducting some investigations into the livestock and 
meat packing industries. As was pointed out by Mr. Burke 
this morning, they obtained through the consent of the packers 
what information they were willing to furnish them. Their 
report is more in the nature of a survey of the general live- 
stock and meat conditions than it is an investigation of the 
problems or evils connected with the marketing of livestock or 
meat food products. What we want is an investigation of 
some of the evils which we are certain exist. 

Does Agitation Affect Prices? 

A great deal has been said in the papers and through some- 
of the emissaries of our friends the packers that agitation will 
affect prices. I do not believe that is a sound conclusion, and 
even if it is we have got to face that alternative. We think 
that the time has come when there should be a thorough going, 
federal investigation, not only of the meat packing industry, 
but of the entire livestock industry; and if after such an in- 
vestigation, the parties that make it can discern any remedies 
that can be applied, action should be taken by Congress to put 
their recommendation into effect. 

It is for that reason that our association is asking the fed- 
eral government to direct — asking Congress to direct the Fed- 
eral Trade Commission to investigate the meat and livestock: 
industry of this country. In this request we do not wish to- 
be unfair to any one connected with the meat packing indus- 
tries, whether it be packers, the commission men, the owners 
of stock yards, or ourselves, the livestock producers. All we 
want is a fair deal. We shall object to anything but what is 
fair, open and above board to every one. We hope that this 
distinguished body of men will see fit before you adjourn to 
carefully review what has been said and what will be said to 
you on this proposition, and that you will pass some resolu- 
tions asking for the investigation to which we refer. We be- 
lieve it will be of great benefit not only to the producer but to- 
the consumer and to the packer as well. 



220 MARKETING AND FARM CREDITS 



WHY A FEDERAL INVESTIGATION OF THE 
LIVESTOCK INDUSTRY? 

D WIGHT B. Heaed * 

I first want to congratulate the officers of this Conference for 
the steadfastness with which they have carried on this work 
which has led to this conference. I want to congratulate them 
on the representative attendance oif the class of men that are 
here, for the interest that has been shown in these discussions, 
or the fairmindedness of the discussions; because, I want to tell 
you, my friends, that this question of marketing is going to be 
a big domestic question in this country. We have neglected it 
frightfully. The wastes of America have been something fear- 
ful. Some wise man has said that Europe could live on the 
waste of this country, and it is indeed true. 

Association's Policy One of Construction 

I want to tell you something of the work of our association, 
the American National Livestock Association. I want to call 
your attention to the fact that we have behind us a record of 
many years' work, and that through all that time it has been 
constructive work. We never have attempted a destructive pol- 
icy, and we are not approaching anything today in a destruc- 
tive spirit. We believe that there are in this marketing of live- 
stock very serious abuses. We think there are definite, level- 
headed methods and remedies. We say to our friends, the 
packers, with whom we do not agree, that we want their help 
in a fair, square, just way in remedying what we think are 
abuses. 

Now this matter has been under consideration by our asso- 
ciation for many years, and I am going to give you very briefly 
a history of what has led up to the present situation. In our 
market committee we have at our annual conventions and 



* Dwight B. Heard of Phoenix, Arizona, is a prominent cattleman, 
and has served that industry for many years in public capacities. He 
is president of the American National Livestock Association. 



DWIGHT B. HEARD 221 

from time to time reports indicating certain conditions which, 
needed improvement. These reports became so convincing a 
year ago that a special conference was called a year ago last 
summer at which the officers of the association, I happening to 
be one, met with that special committee and we talked over 
whether it was not wise to bring the whole question of the need 
of an improvement in livestock marketing conditions to the at- 
tention of the secretary of the United States Department of 
Agriculture. 

Origin of Department Conference 

As the executive officer of the American National in connec- 
tion with Mr. Tomlinson, our secretary, I wrote Secretary Hous- 
ton a letter outlining the situation that we felt existed, and 
asking if it would not be desirable to have a very friendly con- 
ference with all the various interests that enter into this tre- 
mendous question. The secretary seemed to think that the idea 
was a wise one and a year ago last November a conference was. 
called and was held in this very hotel. It was attended by many 
producers. I very much regret to state that at that time there 
were present very few representatives of the packing interests. 
Since then the packing concerns have shown an awakened in- 
terest in the work of our association and the work of the other 
national associations. Why? Because they recognize that the 
time has come for them to work with us towards getting at the 
facts of the situation. Now, sometimes it has been said that the 
market committee is known as the fat hunting squad. But I 
think you will agree with me in view of some of the statements 
that have been made today, some of the figures that have been 
shown you, some of the charts that have been displayed, that 
they are fat hunters and that we are trying to get at the truth. 

All we are seeking is the truth. We do not desire to knock 
any one. We do not desire to destroy any one. We are 
exceedingly glad that the packing industry today is so tre- 
mendously efficient. I presume there is not in the world 
today, even in the steel industry, an industry which is 
handled from such a tremendously efficient, scientific stand- 
point as the packing business. I presume there is no industry 
where there is so little waste. It is perfectly marvelous when 



222 -MARKETING AND FARM CRlEUITS 

you study the reports of trained experts when you find how 
they have increased the value of their byproducts. One of the 
very vital things in this whole situation is, that owing to the 
tremendous efficiency of the packers they have arranged so that 
they get such a large, additional return from their byproducts 
that they can well afford to sell their best meat at the figures 
that they have been selling it, and still they will go right on 
making a lot more money than they did the year before. 

How Does Speculation Affect Consumers? 

When we get this whole question threshed out perfectly fairly, 
another question will be brought up, and that is this, to what 
•extent, if any, does speculation or manipulation of pork prod- 
ucts affect the price of meat to the consumer ? Now, I presume 
that there is comparatively little speculation in beef products; 
but it is generally believed by those men who have studied this 
question thoroughly and impartially, and not with any preju- 
dice, that when it comes to pork products there is a large spec- 
ulative factor. 

In the work that we want to do we want to get away from 
that law of the jungle to which my friend Lasater has so well 
referred, and we want to bring about a condition of real cooper- 
ation. Cooperation, my friends, today is the secret of square 
dealing and success. We want a cooperation which means real 
cooperation; which means that the producer makes his reason- 
able profit on his product, the producer sells to the feeder and 
that feeder feeds intelligently and scientifically, and he makes 
a reasonable profit on his product ; that the packer handles it so 
that he makes a reasonable profit on his work; that the retail 
butcher handles it so that he makes a reasonable profit. From 
the whole history of that animal, what you might call from the 
cradle to the table, it should go through the various factors of the 
Isusiness so that every man has a square, reasonable return on his 
industry, and not so that certain factors make tremendous 
profits w^hile other factors of it absolutely operate the business 
at a loss, as many feeders have done in this country in the past 
two years. 

Now, this is not a question of sentiment; it is a question of 
just getting together on a fair, square, money basis ; not abusing 



A. B. DE RICQLES 223 

one another, but getting at the facts, and trying to be dead fair. 
I am sorry to say that it is very hard for me to see why. the 
packers of this country for whom we have no ill-will, are not 
perfectly willing to say, "Gentlemen, we are with you for a 
complete investigation through the Federal Trade Commission." 
I am here today on behalf of the American National to urge that • 
there be such an investigation. I am here to ask the gentlemen 
who are attending this conference to use their influence towards 
such an investigation. 



WHY PROBE THE LIVESTOCK INDUSTRY? 

A. E. DE RiCQLES * 

Agricultural and livestock interests are so closely connected 
and so dependent on each other, that it is difficult to know where 
one commences and the other leaves off. So many uncertain- 
ties attend the maturing of the crops of each, that both are 
anxious to get for their products, markets as little variable as 
possible. This question of marketing livestock has been one 
that has received much attention in the last few years. It af- 
fects our agricultural prosperity. 

It was only about a year ago, however, that the matter took 
definite shape and, so that you may understand some of the ma- 
terial that Avas presented by the market committee of the Ameri- 
can National Livestock Association, it is desirable perhaps, to 
recite to you briefly the conditions that existed and were the 
main factors in causing the creation of the movement. 

Reason for Creating Market Committee 

Most of the material I will take from my address as chairman 
of the market committee, on January 26th, 1916, at the El Paso 
convention of the American National Livestock Association, at 



* Mr. de Ricqles is secretary of the market committee of the Ameri- 
can National Livestock Association, and lives in Denver, Colorado. He 
is engaged in producing and financing feeding operations in the cattle 
business. The figures he presents here are the results of careful sur- 
veys. 



224 MARKETING AND FARM CRiEDITS 

which time and place the resolutions were passed that resulted 
in recent activity and provided the money to do the work that 
we have been carrying on. 

Stock growers, in the fall of 1915, were disturbed by the pe- 
culiar situation existing in the livestock markets. These condi- 
tions included severe losses by cattle feeders in the corn belt. 

Experience of Iowa Feeders 

One example showed that, out of 56 feeders in Iowa who fed 
2,025 cattle (an average of about 36 head) 53 of them lost an 
average of $19.32 per head, while the other three made an aver- 
age profit of $3.58 per head. 

Prices of Average Steers, Chicago 

It was also shown that the average price of native steers in 
Chicago was only $8.40, as compared with $8.80 for 1914, fur- 
thermore, that the average price of hogs in Chicago for the years 
shown were as follows : 

1915 $7.10 

1914 8.30 

1913 8.35 

1912 7.55 

The average price for hogs in December, 1915, was as low as 
$6.40. It was further shown that the total slaughter for the 
year 1915 showed an increase of only 396,658 cattle and 121,000 
calves, and that on the 31st day of December, 1915, the stock of 
provisions in the five big centers was practically the same as in 
1914. 

Imports and Exports of Beef and Cattle 

The number of cattle imported into the United States in 1915 
was 193,687 head less than in 1914, — and the amount of fresh 
beef brought into the United States for the same period de- 
creased 108,210,283 pounds. 

Moreover the exports of beef to foreign countries in 1915 in- 
creased 290,023,926 pounds and the increase in exportation of 
pork products increased about 518,000,000 pounds. On the top 
of this, we knew that industrial conditions in the United States 



A. E. DB RICQLES 225 

were better in 1915 than 1914, so when you put the whole thing 
together and realize the enormous increase in the cost of pro- 
duction, it is not strange that stock growers felt that there was 
something very seriously wrong and commenced to look about 
them to correct the situation. 

Facilities Owned By Packers 

The first thing they met, to consider was the condition at the 
different markets. Investigations indicated that these stock- 
yards and markets were all controlled by a few individuals. 
They found that the same people who bought their products (or 
the packers) owned these stockyards, cattle loan companies, 
rendering works, railroad terminals and many other things con- 
nected with the handling of livestock at market, and that a few 
men were in command of the situation. 

Earnings of Packers 

It was natural for the stock growers to look at the earnings of 
these packing house men who control these different interests 
to compare them with the earnings of the stockman, and they 
found that the packers had enormously increased their profits. 
For example, Swift and Co., in 1915, after paying a dividend 
of $5,250,000, showed a surplus earning of $8,650,000, as com- 
pared with a surplus earning of $4,200,000 in 1914 and $3,000,- 
000 in 1912. Armour and Company also showed a big increase. 

Remedies Proposed 

Many remedies were at once proposed. Some people wanted 
to indict the packers ; others wanted to build municipal abat- 
toirs. There were suggestions that the government slaughter all 
livestock, or take over all the stockyards. Others proposed 
that the states take charge of the various industries connected 
with livestock within their borders, and many letters were 
written to senators and congressmen asking help ; and a lot of 
congressional resolutions were prepared, some of which were in- 
troduced. 



226 MARKETING AND FARM CREDITS 

The Borland Resolution 

Of course, it was natural for this matter to immediately get 
into Congress, and I believe it was at the suggestion of Missouri 
and Kansas stockmen that Congressman Borland of Missouri in- 
troduced a resolution in the House of Representatives propos- 
ing an investigation of this question by the Federal Trade Com- 
mission. 

This resolution was not originated by the market committee 
of the American National Live Stock Association; that commit- 
tee was not ready to take this question to Congress and had not 
sufficiently studied the matter, but was compelled by the very 
nature of the resolution and the situation as it existed, to sup- 
port the Borland resolution. This w^as done and later in the 
year this resolution was revised and corrected into what might 
be called a compromise resolution, so as to try and satisfy both 
the radicals and the conservatives. 

This, briefly, is the history of the situation. 

Associations Supporting Market Committee 

In the meantime, resolutions supporting the work that the 

market committee had been directed to do were passed by the 

following associations : 

American National Live Stock Association; Cattle 
Eaisers' Association of Texas; Corn Belt Meat Pro- 
ducers Association of Iowa; Kansas Live Stock Asso- 
ciation; Missouri Cattle, Swine and Sheep Feeders 
Association; Amarillo Buyers' Convention; Panhandle 
and Southwestern Stockmen's Association; (Albuquer- 
que, N. M. ) ; Montana Stock Growers ' Association ; 
Wyoming Stock Growers' Association; Cattle and 
Horse Eaisers' Association of Oregon^ 

as well as many others, and a considerable sum of money was 

subscribed for the work of the committee. 

Cost of Producing Livestock 

At some of the hearings before the judiciary committee of the 
House of Representatives in Washington, it became evident that 
to understand this question the producers' side had to be given 



A. E. DE RICQLES 227 

attention and that the cost of production of livestock would be 
brought out. Some of our members believed that we should 
confine our efforts simply to an investigation of the packing 
house and stockyards matter. This course could not be done, 
for all these matters are so closely connected that it is impossible 
to take hold of one side of the question without the other. 

Superficial examination into the cost of production of cattle 
early in the year, has surprised even those who thought they 
were well posted; for example, a very conservative estimate of 
the cost of maturing a Texas Panhandle calf into a three-year- 
old steer resulted in the folloT^ang figures: That the calf cost, 

At 6 months old $24.93 

At 12 months old 33.16 

At 3 years old past (steer) 56.86 

The same steer fed out for six months, in Kansas, cost $105.31. 
Or, if it could be made to weigh 1,300 pounds, the average cost 
per cwt. in Kansas City would be $8.10 before the feeder se- 
cured any profit whatsoever. Taking into consideration the 
present price of corn, cotton seed cake and other feeds, the cost 
of producing this steer would be increased to about $9.40 per 
cwt. in Kansas City. This for the ordinary Texas Panhandle 
three-year-old. 

When the producers figured out their own expenses it was 
natural for them to begin to look into the costs of tho^e who 
bought their product at market (or the packers), and to find out 
whether they were any relation between the receipts and prices 
for cattle and prices for dressed beef. 

Many of us, because the packers showed such enormous earn- 
ings, jumped at the conclusion that this was made out of our 
cattle that were sold at low prices on the market alive, and that 
the packers profited by selling the dressed beef and other pro- 
ducts at a high price. A study of these figures does not prove 
that conclusion to be entirely true. 

Conditions of 1915 Winter Market 

During the winter of 1915, when feeders lost so much money, 
some curious things took place. For example, the receipts at 
the six big markets fell off very fast from the first day of Janu- 



228 MARKETING AND FARM CREDITS 

ary and kept down several months. This was a period of bad 
cattle prices. The price of dressed beef went down sharply. 
The price of native steers in Chicago went down, but not so 
fast perhaps as the price of beef, although it has not yet been 
determined at what prices dressed beef should sell per pound in 
New York wholesale to yield a fair profit to the packer when 
the price of live cattle in Chicago is round 8 cents per pound. 

Average Chicago Price of Native Steers 

In 1915 the price line for live cattle seems to be more regu- 
lar than either the price line for dressed beef or receipts at 
market, although it does not seem proper for the price of dressed 
beef to go down w^hen the receipts decrease or for the price of 
beef to go up in the face of increased receipts. 

Average-Priced Steers — How Figured 

By way of explanation, the average price of native steers in 
Chicago is perhaps not figured in the best way. To get this 
price it would be necessary to take all the sales made in Chi- 
cago and the weights and the price, and figure out an exact 
average, but that would be impracticable and is too much of an 
undertaking, nor would it be sufficiently valuable to justify the 
expense. 

Swift's Beef Figures 

The average price has been established by the market papers 
for years, in a certain way in connection with these market 
quotations, and is approximately correct and will serve as an 
index for the present. This may also be said of the price for 
Swift's wholesale domestic beef in New York which is used as 
an index, and while we are not sure as to how it is determined 
still for years they have been publishing this average price for 
their dressed beef in New York. 

The cattle receipts at these markets of course are correct. 
This chart, if it proves anything, would indicate that there is 
very close relationship between the price of wholesale beef in 
New York and the price of live cattle in Chicago. These two 
price lines seem to be consistent and it seems natural that in the 



A. E. DE RICQLES 229 

fall of the year, when there are big receipts, both the price of 
live cattle and the price for dressed beef should decline. It -does 
not seem natural, however, as stated before, for the price of both 
cattle and beef go down in the face of decreased receipts, as 
they did during the winter of 1915. The fact that the price 
for dressed beef did go down rather disarmed the producer of 
his idea to indict the packer for his low prices. Had we found 
the price of dressed beef high during the winter of 1915 we 
certainly would have been able to enforce a claim for damages 
against them; but such was not the case, and all the informa- 
tion that the market committee has been able to secure tends to 
point to a very poor demand for beef during the winter of 1915 
and difficulty in selling the same. This of course does not ap- 
ply to dressed beef that was exported to Europe, and it is per- 
haps on that export business that the packers made their great- 
est revenue and, therefore, we should have been paid more for 
our fat cattle. 

Variation in Volume of Sales 

Just what the price of cattle might have declined to, had there 
not been this export movement, is not known. One of the most 
remarkable features shown by the chart is the strange perform- 
ance of the beef market in the month of October, when the price 
of beef went up very sharply at the time of the greatest re- 
ceipts of cattle at market. You will see after that a steady de- 
cline in both cattle and beef prices. 

One of the small charts which your attention is directed to, 
shows the variation in price of bulk of sales of cattle in Chicago 
for the week ending September 29th for the years 1913, 1914, 

1915, and 1916, You will see that the variation of price for 
these four years is also marked and is the greatest in the year 

1916, when it extended from $7.75 to $10.75. It is of course 
a fact that the shorter this line, the better it is for the shipper, 
or the man who sells the cattle, as the long line always carries 
with it many cattle at the low price or the low^er end of the 
line. The public is much impressed by the published report of 
cattle sold at especially high prices. These few lots of fancy 
cattle that top the market through the week are, of course, very 
wonderful, and especially fine for the feeder who is able to do 



230 MARKETING AND FARM CREDITS 

this work, but they do not help the great number of men whose 
cattle sell within the line called "bulk of sales," because the 
consumer, when he hears of steers bringing $150 and $175 apiece, 
vows he will cut out this high-priced beef from the bill of fare, 
and proceeds to buy something that is not so cheap or so nourish- 
ing. 

Average Price of Steers and Swift's ;Beef in 1916 

The third chart that I am presenting to you shows the average 
price of beef steers in Chicago and the average price of Swift's 
beef in New York for part of 1916. If you consider these two 
charts you will at once realize that they are to a certain extent, 
consistent. How much dependence one can give to the figures 
published by Swift & Co. for sales of their dressed beef in New 
York will be taken up later in this article but in a general way 
the lines created are consistent. If anything, the cattle line is a 
little steadier than the beef line. You will note that the extreme 
variation for Swift's beef was $4.30 per hundred and the ex- 
treme variation for beef steers is $2.40. This chart is more 
valuable in connection with matters that I am to present here- 
after, than if used alone. 

Average Price of Steers for Three Years 

The fourth chart I have here shows the average price of beef 
steers for the three years namely, 1914, 1915 and part of 1916. 
There is very little difference in the three years, with the ex- 
ception of a short period during the early summer of 1916, when 
beef cattle reached a very high price. The average fior the 
three years seems to run along in about the same line and pos- 
sibly $8.50 would be the average price per 100 pounds for these 
three years. 

Swift's Beef at New York, 1915-16 

Chart No. 5 shows the sales of wholesale domestic beef in New 
York of Swift and Co. There is very little variation from last 
year, except as stated in the early summer, and the sale of this 
dressed beef seems to be consistent with the price lines of beef 
steers in Chicago for the same period. 



A. E. DE RICQLES 231 

Receipts of Cattle, 1915^16 

The last chart shoAvs receipts of cattle at the six important 
markets, viz., St. Louis, Kansas City, St. Joseph, Omaha, Chi- 
cag^o and Sioux City, for the years 1915 and 1916. At this time 
the increase of cattle at these various markets is something over 
1,000,000 head and the receipts are back now to about where 
they were in 1907. 

Explanation of Increased Receipts 

"We should not be alarmed at this increase in the receipts of 
cattle ; that is, we should not be disturbed because they are large 
in number. What should disturb us, however, is the unfortun- 
ate condition of drouth, and feed crop failure over many sec- 
tions that has caused these cattle to move around from place to 
place; and while possibly one-half of the increase has been sent 
to the killing house, still it does not mean that the country is 
overstocked, based on a normal feed crop condition. 

Beef Prices Justify Cattle Prices 

Going back to the charts, the conclusions that we make from 
them are about as follows : 

1. If the prices given by Swift and Company for 
domestic dressed beef are fairly arrived at and are, in 
fact, the average for wholesale dressed beef in New 
York, then and in that event the price paid for live 
cattle in the years 1914 and 1915 would be, to a cer- 
tain extent, justified unless the prices at which the ex- 
port beef was sold were high enough to entitle the beef 
steer producer to more money. 

2. Receipts at market do not always regulate the 
price for live cattle. As is easily noted on these charts, 
in some cases prices for live animals decreases on small 
receipts and increased on heavy receipts. 

3. These receipts at market are controlled by ele- 
ments over which we have no control, such as the sea- 
son, or unfavorable conditions of weather in certain 
sections or favorable conditions of weather in other 
sections. Also the receipts at market may be affected 



232 MARKETING AND FARM CREDITS 

by the movement of empty stock cars. These ears fre- 
quently go back to points of loading in large fleets, and 
they seem to keep swinging back from loading points to 
market in these long trains like a pendulum, and from 
the very nature of this car movement congestion fol- 
lows. Of course, it is more economical for railroads 
to haul 75 or 100 empty cars in one train to the loading 
district, than to scatter them out in small lots on local 
trains. This is on account of the car cleaning system, 
tonnage and other features. 

Shipper Hesitates to Criticise Packer 

Before going further I want to mention the fact that in tliis 
business it is embarrassing for the shipper of cattle to market 
to criticise the methods of those who buy his product. Many 
of the patrons of the market are afraid they will be discrimin- 
ated against, and they have hesitated to present their griev- 
ances. This is one of the features that has made it difficult to 
get before the principals the actual defaults and mistakes that 
are made. 

Packer Hesitates to Criticise Retailer 

Another thing that we must not lose sight of is the fact that 
the packers are in just the same fix in this matter of criticism, 
feeling that perhaps they are not in a position to criticise the 
retail men to whom they sell on account of high charges for re- 
tail dressed meats that are sold over the counter and about 
which we read so much in the papers. For example, if Swift 
criticises the butcher to whom he sells for the way he charges, 
the butcher might say that it was none of his business, quit him 
and buy his meat from Armour. These are some of the situa- 
tions that exist, and we must be careful in our undertakings 
not to ascribe sinister motives to everything that is done. 

Emphasize Need of Investigation 

It is at this point that we wish to emphasize the necessity 
for a federal investigation by some committee that is free to 
present facts without fear, and whose report the people will 



• A. E. DE RICQLES 233 

accept. Whatever a packer or shipper might state, does not 
have much effect, for back of it would not be the same disin- 
terested authority that would go with the report of an author- 
ized body, such as the Federal Trade Commission. An in- 
vestigation by that body should relieve the timid shipper from 
the fear of being injured on account of his complaint of bad 
treatment. It would relieve the packer from the necessity of 
criticising the retail butcher for high retail prices, something 
that we certainly believe should be thoroughly gone into, just 
as much as any other feature of the business. It would also 
enable those investigating the question to determine how much 
importance or reliance should be put on the published price 
made by Swift & Co., for weekly sales of dressed beef, and 
thereby, give us some authentic basis of comparison in the 
matter of prices as between live cattle and dressed beef. Those 
very features alone seem to me sufficient to justify this pro- 
posed Federal Trade Commission investigation. 

Experience in New York City 

You may be interested in hearing a short statement regard- 
ing what I recently learned in New York. I found that a 
great many of the wholesale houses were grouped together in 
certain localities where switching facilities were available, and 
from which large sections are supplied. For example, at one 
point Armour, Swift, Morris, Wilson & Co., and others were 
all located side by side. 

The location of these wholesale houses adjacent to each other 
creates a condition in the sale of fresh meat quite similar to 
that which exists in the sale of live cattle that we find existing 
at Union Stockyards in Chicago and elsewhere. However, 
the location of these markets in such close proximity is in the 
direction of economy and convenience for the retailer who may 
go out on a buying expedition, for he can in a short time see 
the offerings of all the packers and make his selection with a 
minimum of time lost in going about. The centralization of 
these plants, however, has the other feature, that of enabling 
the wholesalers to keep track of each other and their customers 
and to have much knowledge of the business of the other 



234 MARKETING AND FARM CREDITS 

houses ; and, if they so desired would aid in continuing a mutual 
understanding between them as to price, distribution, etc. 1 
understand that about 45 per cent of the wholesale dressed 
beef handled in New York is sold on Mondays and Tuesdays 
of each week. This large percentage in the first two days of 
the week may have some relation to the Monday market in 
Chicago and the concentrated receipts of cattle on Mondays 
and "Wednesdays. I was much surprised to note the unsanitary 
conditions of the wagons used by the retailers to carry their 
purchases from the wholesale house to the retail shop. The 
meat is not delivered by the wholesale packer, but is taken 
home by the retailers in their own conveyances. It has oc- 
curred to me that as an economic move, we may finally ask 
the big packers to add the retailing feature of the business 
to their undertakings. We would then be dealing with re- 
sponsible parties whom we could hold to account for unreason- 
able prices or unsanitary conditions. I will touch on this 
again before closing. 

Reasonable Prices of Wholesale Meats 

I was much impressed by what seemed to me reasonable 
prices for wholesale meats and their excellent condition; but 
on the other hand, the retail shops did not seem sanitary and 
their prices were certainly very high. In one retail shop I 
noticed soup meat priced at 19 cents per pound and chuck 
roasts and steaks at 23 cents and 25 cents. These prices, 
charged over the counter, certainly are exorbitant and out of 
all line with the wholesale price. 

Soup Meat Versus Baked Chicken 

In this same shop they were selling baked chickens at 60 
cents per pound. Even at 19 cents per pound the soup meat 
has twice or three times the food value. This baked chicken 
business hurt me as it is such folly. It is a straight adver- 
tisement and indictment of the ignorance of a class of the pres- 
ent day American housekeeper who, coming home in the late 
afternoon from a picture show, rushes over to the grocer and 
buys a cooked cold storage chicken for the husband's supper 
and passes by the splendid beef costing only one-third as much, 



A. E. DE RICQLES 235 

even at the high rate now asked; and then spends the next day 
complaining about "the high cost of living." 

If we conld educate these classes in the best way of cooking 
medium cuts of beef, it would go very far toward solving 
these perplexing market questions. It will come to that some 
day, just as Germany has had this thing to work out; but it is 
a long way off, and the present is a period of ready-cooked 
meats, canned vegetables, picture shows and divorce courts. 

Meat Business a Monopoly 

A continued study of this special market question as regards 
livestock leads one in the direction of the idea of monopoly. 
The more you dig into it, the more you are convinced that it is 
a monopoly, and perhaps you also believe that instead of de- 
stroying this monopoly and experimenting with something else, 
we had better take charge of it and try to regulate it so as to 
eliminate its bad features and continue the good ones. 

I think the principals in this packing house business are 
convinced that they should ease up a bit on the old time market 
pressure. I am satisfied that a great many things have been 
done at market of which, they were not informed, and even- if 
they did know it, I believe they have come to the conclusion 
that it is not now good policy to continue to put too much 
pressure on either side of the business ; that is, reduce too much 
the price of cattle that are bought at market or hold the dressed 
beef at too high value. 

In fact, I do not believe they have as much to say about the 
price for dressed beef as we think they have, because I noticed 
a butcher in New York who was buying quite a number of 
dressed cattle making bids on them at a sum considerably less 
than the salesman was offering to take, and when his bid was 
not accepted he went off to another place. That was a revela- 
tion to me because- 1 have always had the idea that the retail 
butcher who bought wholesale dressed beef in New York had 
very little to say about the price ; while, as a matter of fact, it 
looks as if he had it much his own way. 

Importance of a Disinterested Investigation 

All these matters that I have touched on lead to but one con- 
clusion, namely, that the government should immediately go 



236 MARKETING AND FARM CREDITS 

into all of these questions very thoroughly ; not with the object 
of putting anybody in jail or destroying anything, but simply 
to get the absolute facts and reliable figures and information, 
to the end that the real conditions of affairs be brought out. 

Therefore, it seems to me of the utmost importance for us 
to convince the packing house people and stockyard companies, 
to join with us in a petition to the Congress of the United 
States to authorize the Federal Trade Commission to go thor- 
oughly to the bottom of all these situations and let us look at 
it; and for one I am ready to sign any sort of petition that 
will result in an investigation of this kind. As a large owner 
of livestock I would be glad to have the Trade .Commission 
commence first, if it so desired, on the feature of the cost of 
cattle production because I am sure that when this is demon- 
strated and thoroughly understood, there will be an end to this 
howl in the papers about the enormous profits made by the 
cattlemen. You will cease to hear people accused of being paid 
too much for their cattle ; and the buyers who purchase our 
cattle at. market will realize that if the supplies for their pack- 
ing houses are to continue they will have to pay a fair and 
regular price. 

Cattle Men Confer With Packers 

I believe that the market committee is to have a conference 
with the principals in the packing business. I have nothing 
more to say to the packers than is in this statement, except 
that I believe if they will agree with us on a petition to the 
Federal Trade Commission and sign it, that it will be one of 
the most important things that has been accomplished this year, 
for it will take them out of the present position of being the 

defendants. 

« 

Refusal of Packers to Accept Investigation 

Their refusal to go with us in this matter has placed them in 
a questionable position, and regardless of their statements to 
the contrary and their efforts to prove to the public otherwise, 
so long as they refuse to agree to this investigation of the in- 



J. B. KENDRICK 237 

dustry from one end of it to the other, just so long Avill they 
be suspected of combination and conspiracy. 

People More Important Than Property 

Before closing I want to present to you an idea. I believe 
it was illustrated by the recent election. Namely, that out in 
our western country especially, the sentiment seems to be 
gaining ground, that, after all, people are more important than 
property, and that while property in the past has been con- 
sidered first, we now are giving a little more thought to the 
people who produce it 



INEQUALITY IN MARKETING LIVESTOCK 

J. B. Kendrick* 

I have been in the livestock business since a boy. In fact, 
it is a case like Joseph said to his people: "Both I and also 
our fathers, our business hath been about cattle. ' ' I have gotten 
young steers in the Panhandle of Texas, two and three years of 
age, and shipped them to Montana and Northern Wyoming and 
matured them in two or three years. I have held them two or 
three years longer; paid the freight on them to that country; 
paid the freight on them from there to Omaha, and have taken 
them in a Southwest when we could load say 38 to 40 in a ear 
at $21 a head, and when I shipped them to market at 22 and 23 
in a car, I have taken $21 a head for them. After shipping 
them, paying the freight on them two ways and paying the 
expenses on them two years and standing the loss, I had nothing 
out of it but two years' use of the cattle. 

This sort of experience ought to qualify one in a sense to see 
the need of an investigation. 

I also have on other occasions sold native cattle that were 



* J. B. Kendrick is a prominent cattleman of Wyoming, and was 
governor of that state when he delivered this address. He was elected 
to the United States Senate in the 1916 general elections. 



238 MARKETING AND FARM CREDITS 

produced on the range weighing 1,200 pounds at $3.40 netting 
about $35 a head, $33 to $35, when the hides on those cattle 
were selling for about $14 apiece. Of course, though we are 
inclined to be liberal and generous, that sort of experience is 
calculated to make us suspicious. 

"When appointed upon this committee in El Paso I asked our 
friends to go about it in a thorough, straight-forward, sensible 
sort of way to find out whether^ or not there was anything wrong 
in the way our cattle was marketed. Do you know that this 
volume of business is perhaps one of the largest in the Nation? 
It reaches out and touches the interests of almost every com- 
munity in the United States, including every kind, of livestock — 
even the poultry on the farms ; and- the magnitude of it alone 
would justify the most searching and far-reaching sort of an 
investigation. 

Investigation Should Be Impartial 

We began our work in this spirit and our investigation carries 
with it no indictment of anything wrong. That is the farthest 
thing from our minds. We are going to assume that these men 
with whom we are dealing in the central markets are innocent 
until they are -proven guilty. We are not going to assume the 
other way around ; but we are going to investigate just the same, 
and nothing could be more conclusive on that point than this 
gathering here .today and the sensible sort of a way that people 
are insisting upon every step that has been taken. 

Now from my viewpoint, I believe that these gentlemen who 
have controlled the markets, as we say, or have bought our 
products, ought to be even more insistent upon this investiga- 
tion than are we; because we have it from every side. If they 
would come with me into the country, to the men who produce 
these different kinds of livestock, I could easily show them that 
the wind is rising. It is not only to become a whirlwind, it is 
1 later on to become a cyclone, unless this matter is entirely 
cleared up. When a man has taken the price of his product in 
the market, whether that is high or low, that price ought to be 
definite and satisfying. We of the West have taken without 
grumbling the low prices, and what we are insisting on now is 



J. B. KBNDRICK 239 

not a rise in price but a market for- our product ; and that is 
just exactly what we are entitled to. 

Producers Ask for Fair Remuneration 

I say to you further that we do not ask these gentlemen who 
are buying this product to make up for the slipshod methods 
of production. We simply ask them to base this business on a 
■competitive and a fair basis — one that will guarantee .to every 
man who produces it under proper conditions the right of 
remuneration. If he produces it in a way and at such a cost 
that is not justified, why certainly he must stand for the loss 
and not the men who are, handling this product. Those of us 
who have to do with this investigating com^mittee, this market 
committee, if you please, are not taking this step in a selfish 
sort of a way, and we are not asking for any advertisement. 
What we are doing ^n this case is to get information that shall 
•draw this whole matter into the limelight, as every other kind 
•of a legitimate business is carried on, so that every man may 
know just what he is doing. If these men join hands with us 
in this , investigation we believe that it will be to their benefit 
as well as the benefit of the producers of this livestock. 

We believe that before we are through with it, they will, be 
very much in the same position as the managers of the great 
railway lines of this , country. You have noted for the last 10 
or 15 years that every effort to make an inquiry, an investiga- 
tion, every effort to correct the abuses of the railroads has, been 
fought to the last ditch. And yet you have seen the men who 
manage those railroads , concede that after the reforms were 
instituted they were the best things that had ever been done for 
the railroads. We believe the same thing will prove true in 
this particular case. 

Yet I want to say to you, finally, that those of us who are 
carrying on this investigation are not doing it for selfish reasons. 
It is not enough for us to believe that we are getting the fair 
market price for our product if our neighbor is not getting a fair 
price for his. If we of a state are getting a fair price, 
we want the people of the next state to have it as well. 
It is a bigger question than an individual one ; and we are pro- 
ceeding along that line exactly. And I say to you that the fun- 



240 MARKETING AND FARM CREDITS 

damental principle behind and under it all is the fact that 
we are through -with the survival of the fittest plan. We are 
trying something else; and we ask these men who control these 
big markets to join hands with us in this investigation. 



WHY LIVESTOCK PRICES CHANGE 

George K. Andrews* 

Sometime ago a very civic and altruistic organization in St. 
Louis inquired what they could do for agriculture. Some one 
told them that the farmer was more in need of marketing his 
farm products than of any other one thing. Accordingly, a 
committee was appointed to investigate that subject of which 
I was made the chairman, or, as we sometimes call it at St. Louis^ 
"the goat", because I had a good deal of the work to do. That 
report is here to be submitted to this meeting because of the 
action of your program committee, but I am charged by the 
officers of the Business Men's League of St. Louis to say that 
this report has not been acted upon by it, possibly because they, 
have not had a meeting yet, and also possibly because knowing 
me they did not want to be responsible for what might be said 
at this meeting. It cannot only show the relation between pres- 
ent demand and supply and price, but if the figures are charted 
properly, flat enough to show the curve, they project themselves 
into the future. It is the most scientific way of ascertaining 
what the tendency of the market is going to be that is known 
at the present time. In our study of this matter we had occa- 
sion to question people engaged in large commercial transactions 
in a jobbing and wholesale way, and whatever the product hap- 
pened to be, whether it was muslin sheeting or hogs, if you will, 
every merchant said that whenever the market is oversupplied 
with any one of those staple commodities there was a break 
caused by two conditions, one because the buyers did not want 



* Mr. Andrews is agricultural commissioner for the Missouri-Pacific- 
Iron Mountain Railway system, with headquarters in St. Louis, Mis- 
souri. This report was written by Mr. Andrews and concurred in by 
the other members of the subcommittee consisting of C. H. Schlapp, 
I. R. Kelso, and Wirt Wright. 



GEORGE K. ANDREWS 241 

that much and the other because of a psychic condition, a sort 
of panic that set in that made people sell their goods whether 
or not. So that it is almost axiomatic in business that when the 
market becomes flooded the price of that product drops below 
the cost of production. 

I say that the price of hogs is determined by the hogs pro- 
duced in 14 states by 3,000,000 farmers. The fact of the matter 
is that the price of hogs is determined by the price that the 
packers pay. They buy 33,000,000. Of those hogs 32,000,000 
are raised in 14 states — Ohio, Indiana, Illinois, Michigan, Wis- 
consin, Minnesota, South Dakota, Nebraska, Iowa, Kansas, Mis- 
souri, Kentucky, Tennessee and Oklahoma. 

In other words — the plat isn't here that we had this morning 
— there were some incongruities pointed out in that plat. It 
was said that at the time when the supplies of cattle were de- 
creasing, notwithstanding that, the price of cattle decreased. 
If alongside of those two lines were platted the exact conditions 
of the demand at that time it would show that the demand had 
to do with the decreased price and that price decreased in spite 
of the fact that the receipts of cattle had decreased. It would 
show very plainly that that price was the result of an improper 
agreement somewhere ; I am not saying where. 

REPORT ON MARKETING FARM PRODUCTS 

To the State Development Committee of the Business Men's 
League of St. Louis:* At a previous meeting of this committee 
it was said, in substance, that the farmers and especially those 
in the Corn belt are of one mind in the belief that farm products 
are not being marketed at fair prices, as evidenced by volumi- 
nous complaints by farmers and farm writers in all farm jour- 
nals. That these complaints are accompanied by the assertion 
that prices undergo rapid changes ; rising to a profitable figure 
so as to encourage production and thereupon falling, without 
any cause perceptible to the farmer, to an unprofitable one. 
That a very eminent authority has said in commenting upon 
this condition that not much further progress towards maximum 

* This organization is now known as the St. Louis Chamber of Com- 
merce. 



242 MARKETING AND FARM CREDITS 

yields is to be looked for without some improvement in market- 
ing farm products by means of which prices are maintained more 
uniformly above their bare cost of production. 

Thereupon this sub-committee was appointed to investigate 
and report touching possible development work by the Business 
Men's League in the way of affording better marketing facilities 
or marketing advices to the farmers in its trade territory. 

Marketing' of Meat Products Unsatisfactory 

The unsatisfactory marketing conditions most detrimental 
to agriculture in the Corn belt are those relating to livestock. 
It is absolutely essential to the upkeep of soil fertility in the 
Corn belt that its great name-crop be fed for the most part 
on its farms. Without animal husbandrj^ there is no such thing 
as a permanent agriculture and without profit there is no such 
thing as a permanent animal husbandry. This country simply 
cannot afford to have livestock sold off its farms without profit ; 
for while the loss falls first on the farmer and second on the 
farm, it falls at last and everlastingly on the whole country. 
If there were no other way to prevent such a calamity than to 
prevent selling meat off a farm for less than cost and profit, 
then it would be money in every man's pocket to make such a 
law and provide the costly and elaborate machinery to enforce it- 

The methods of the husbandry of dairy products, cattle, hogs 
and sheep differ one from another in matters of production but 
are practically alike in the matter of marketing. The farmer is 
at the same disadvantage in marketing one such product as in 
ihe others; and the losses when they occur in any one of them 
have the character common to all. in that they are not productive 
of corresponding gains to consumer and are therefore economic 
losses or wastes. 

Factors That Control Price 

The controlling factors in marketing a staple farm product 
are price, demand and supply. Each such factor is influenced 
by the others, so they must be studied together. Price is further 
limited and controlled, at the top by intrinsic value and, at the 
bottom, by cost of production. And if the product is marketed 
in the unfinished state, demand will be influenced by the price 



GEORGE K. ANDREWS 243 

of the product in the finished state. All of the major and 
minor factors are further influenced by the plexus of related 
conditions of weather, finance and trade, some of which matters 
may at times assume the proportions of controlling factors for 
the time being. 

Wheat may be sold at any time; but nearly every other farm 
product must be sold soon after it is grown, if it is to fetch a 
profit or, profit aside, if it is to avoid a loss. When the time 
comes the farmer must go to market and when he gets there 
with his carload he has to sell whether the other man wants to 
buy or not. In going to market he is going it blind; but he 
meets a buyer who knows the market factors up-to-date and 
how to assemble and equate them. 

Individual Must Decide for Himself 

Howsoever paternally inclined, the government is not going 
to tell him when to sell, no matter whether it should back up 
its judgment or back up from it. All he is entitled to, and 
probably all he wants, is an even chance in the game of market- 
ing, which is the game of wits ; he is no fool. How is he to get 
the even chance? In no other way than by getting the same 
knowledge of market conditions. We have herein a hypothetical 
set of marketing conditions pertaining to the hog market. It is 
stated graphically. If put down in plain words and figures most 
men would give up trying to find out what they meant and go 
and sell their hogs ; but stated as they are, any man will under- 
stand them at a glance. Stated the other way, the least you 
can do with, is a sheet of paper and the higher mathematics; 
stated this way the most you can require is eye sight, with or 
without specs as your case may be. 

Price, demand and supply are seen to be indicated at regular 
intervals of time, and as the notations are continued they take 
the form of a line that runs upward or downward at each change 
of the particular factor. Certain factors are seen to have been 
at times under the influence of minor factors. Poor business 
conditions pulling demand downward and therefore being rep- 
resented as a weight ; good business, at another time, lifting it 
upward, like a balloon. At the beginning of the total period 



244 MARKETING AND FARM CREDITS 

covered of 17 weeks, the price was around $7.50 and the 
packers were buying 630,000 hogs a week from the producers 
and the real demand, according to commerce reports of hog 
products market conditions, is seen to be equivalent to 630,000 
hogs a week. Thereafter a period of trade depression sets in 
at about the time when supplies increase. The demand then 
falls below the supply, the price starts downward, and never 
stops until it falls below the cost of production, a result to be 
expected under such conditions, */ you are aware of the condi- 
tions themselves. 

Subsequently a trade revival sets in, stimulating demand and, 
in turn, supply, the latter being stimulated not only because 
the packers wanted more hogs, but because they began to run 
the price up on each other. While the demand keeps head of 
the supply, the price naturally keeps rising; but the nearer 
supply catches up with demand ■ and the nearer the price ap- 
proaches the top limit of intrinsic value, the less it rises. This 
makes the price line assume the shape of a curve. But inas- 
much as the rise is less and less each succeeding week, the curve 
changes its degree of curvature or radius each week. In other 
words, it is a compound curve. Now if we extend this curve 
into the future, compounding it in the ratio of its previous com- 
poundings, we begin to see that the price is going to reach the 
top limit a month hence and this limit will be pretty close to 
$7.75. This price prediction is almost machinelike in its accu- 
racy if the data with which the lines are made of price, demand 
and supply are correct. Supply is obtained from the produc- 
ing activities and marketing operations of 3,000,000 farmers 
throughout 14 states, and demand is the expressing of the capac- 
ity of 50,000,000 of townspeople to consume those enticing pro- 
ducts of the hog which once made for us the season of his 
assassination a continuous round of pleasure. It takes a pretty 
big jolt to move such a price line very far out of its orbit. 

In this connection, along with the complaints enumerated, the 
charge is made by some of the writers in farm journals that 
price-breaks are the result of unlawful agreements of buyers. 
But, unless a price-break is the result of reasonable and legiti- 
mate conditions, it would be seen to be unreasonable and un- 



GEORGE K. ANDREWS 



245 




rHJl'iafellttS 



246 MARKETING AND FARM CREDITS 

founded in fair dealing when platted alongside demand and 
supply. 

Farmers Need True Information 

Furnishing market information to the farmer is good business 
for any association of business men having the brains and other 
resources to do it with. Without market information the farmer 
is helpless and, left to himself, is helpless in getting it. At 
present, whenever there is an overcrowded market to a degree 
sufficient to bring on a price-break, such drop of a dollar means 
$6,000,000 less hog money in the Corn belt each month, 
and, when the drop goes down to six dollars or so, the farmer's 
profits are wiped out and the next drop cuts into the pay for 
his feed and labor. Thirty-four per cent of the losses on hogs 
occurs in the three adjacent states. Now, there is no sense in 
price-breaks going so far. Long before the bottom is reached 
they could and should be checked. Shipments should be re- 
duced, both by holding back small percentages of those lots 
whose owners have to sell, and by getting rid of the psychic 
obsession of those who do not have to sell but do so out of appre- 
hension. 

Information as to the staple crops — corn, wheat, cotton, etc., 
is probably full enough for practical purposes, acreages, crop- 
pest and weather conditions throughout the world enable esti- 
mates to be made of volume and price; and the range of prices 
so arrived at is apt to obtain, subject only to such modifications 
as meet changing conditions. Any improvement in marketing 
staple crops will doubtless consist in getting the information 
derived from the farm back to the farmer in concrete and useful 
form. That relating to livestock, on the contrary, is not ob- 
tained at present with fullness and accuracy. The livestock 
crop is never wholly dependent upon current field crops. One 
farm or one large section may be raising and feeding its maxi- 
mum amount of live stock while another farm or section, under 
like crop conditions, may be doing little or nothing. Market 
predictions, made without the knowledge of visible and future 
supply, are mainly guess work ; and if the farmer is to have 
reliable information with which to make his predictions, he 
must furnish the ground Avork therefor. 



GEORGE K. ANDREWS 247 

It is easy to find difficulties in the way of gathering such a 
vast quantity of details. "We have listened to a long list of 
them. Beef cattle differ so much in kind that mere numbers 
count for nothing. During their growth and fattening they are 
perambulating around the country from one place to another, 
as the grass is eaten down in one section and feed is ready in 
another, making it impossible to keep track of them. Farmers 
are reluctant to give out information. If farmers knew the 
information given out by them was coming back to them for 
their own use, they would be glad to give it out. And, if make- 
shift resorts were abandoned and the data obtained in a busi- 
ness-like way, these other difficulties would disappear. The 
great expense of the work will probably be urged against it. 

The corn yield for the United States averaged for the 10 
years, ending 1909, two bushels per acre less than for the 10 
years preceding. The decrease in Iowa was the same but in 
Missouri it was only 1.2 bushels per acre, and yet for those two 
states alone the decrease in yield per acre amounts to $30,000,- 
000. Part of the lessened yield was due to causes other than a 
more impoverished soil; but it is safe to say that anything that 
puts animal husbandry on a paying basis is worth half a million 
dollars a year to every state in the Corn belt, and anything that 
even promises to aid in doing so is worth whatever it may cost. 

How to Secure Accurate Data 

HoAV is the mighty volume of farm data to' flow from the farms 
to its destination, and how are the results derived therefrom 
to get back to their source? 

It can be made to flow from the farms to the country public 
school, there to be assembled for each such district by the head 
teacher and the scholars as part of the educational work of the 
school. It would then go to the state board of agriculture, to 
be again grouped in county units or in one single state unit or 
set of units. From the state board of agriculture it could 
be sent to the head of the organization, there to be made into a 
curve to be platted along Avith its related curves or factors other- 
wise gathered. Thereupon this could be made to travel direct 
to the school houses. 

When this subject was broached it was believed that the work 



248 MARKETING AND FARM CREDITS 

might turn out to be big enough for the Business Men's League. 
It did. But even this rapid reading must show that the infor- 
mation required m.ust come from the Avhole country, and, of 
course, belongs to the whole country. It, therefore, devolves 
upon the state and federal governments, and, of course, so far 
as its central activities are concerlied, upon the Office of Markets 
and Rural Organization of the United States Department of 
Agriculture. 

The only recommendation your sub-committee makes is that 
the state development committee, or other proper committee 
of the Business Men's League, should lend its influence and 
endeavors to the furtherance of such efforts, legislative or other- 
wise, as may be made at any time to obtain for the Office of 
Markets and Rural Organization reliable, complete and useful 
reports of farm products so as to transmute the knowledge 
derivable therefrom into forms of usefulness to agriculture. 



FEDERAL MARKET NEWS SERVICE OF 
LIVESTOCK AND MEATS 

Louis D. Hall* 

The topic that has been assigned to me is ' ' The ^Market News 
Service of Livestock and Meats", and is such a large one that 
I am going to stick entirely to that subject excepting this. 

So many have asked me just what the office of Markets and 
Rural Organization is, and I have heard so many remarks that 
indicate that a great many either have no idea or the wrong 
idea of what it is, that I should like to take just a minute to 
make clear to you just who we are and where we belong. In 
1913, Congress, by a special act, authorized the secretary of 
agriculture to establish a new bureau or section in the depart- 
ment of agriculture to be called the office of markets, and the 
office was established in May of that vear with Mr. Brand as 



* Louis D. Hall is specialist in livestock of the Office of Markets and 
Rural Organization, United States Department of Agriculture, with 
headquarters in Washington. D. C. He has been placed in charge of 
the new market news service inaugurated by the department and for 
which an appropriation of $60,000 annually has been made. 



LOUIS D. HALL 249 

chief who is still serving in that capacity. A year later the 
rural organization service was combined with the office of mar- 
kets under the name of Office of Markets and Rural Organiza- 
tion. The authority conferred by law on this bureau I shall 
not try to quote exactly, but in substance is this, to collect and 
distribute useful information relative to the marketing and 
distribution of farm products. 

The principal misconception which I want to remove from 
the mind of any one who may have such a conception is that 
this is a great deal more than a bureau of market statistics or 
market economics. The primary purpose which we are trying 
to serve and hope to serve more fully than we yet have been 
able to do is as a direct service bureau. The market statistics 
and the studies in economics which we might make would be of 
very little use unless they were put into application and our 
purpose is to put them into effect at every possible point. 

Another thing I should like to say as to our general policy, 
if I may quote our chief, Mr. Brand, there are three classes of 
views held by the people of the country with regard to these 
marketing problems and they are : The pessimists who think 
everything is all wrong and ought to be revolutionized as to 
market systems; the optimists who think that everything is all 
right and it is dangerous to tamper with the machinery ^f or fear 
we will gum it up ; and then there are, I am glad to say, a good 
many rationalists who believe that there is plenty of room for 
improvement but that improvements should be made step by 
step, sanely and rationally. One of the planks in our platform 
is rationalism. 

Lack of Stable Market Prices a Handicap 

So far as the marketing of livestock and distribution of meat 
is concerned I think it is not too much to say that the greatest 
problem of all is the unstability of market prices, the fluctuating 
nature of market conditions. That has been mentioned in this 
meeting during the last day or two very frequently. It was 
mentioned in the conference which was held under the auspices 
of the department of agriculture in this hotel a year ago, more 
frequently than anything else. It not only has made it more 
difficult for the stockmen to operate than any other one thing, 



250 MARKETING AND FARM CREDITS 

but it has created more dissatisfaction, more suspicion in their 
minds I think than anything else as to the soundness of the 
basis on which market conditions naturally rest. 

Mr. Heard told you yesterday that the American National 
Livestock Association for years has been expressing itself at its 
meetings in favor of official reports on livestock and meat market 
supplies, prices and conditions. A number of the prominent 
state associations for several years have passed resolutions to 
the same effect, specifying the department of agriculture as the 
agency of the government which ought to compile and distribute 
current market information. 

At this very Conference a year ago I recall that in a number- 
of the sessions the need of more accurate and reliable market 
information was mentioned as one of the great needs of the 
solution of marketing problems ; and the great obstacle to intelli- 
gent study and discussion of the problems of marketing and dis- 
tribution today is the lack of reliable market statistics. 

Mr. de Ricqles told you yesterday and showed you the curves 
which are so interesting, that the averages on which they were 
based were not true averages, but the best that could be obtained 
up to date and that better information was seriously needed on 
which to construct curves of that kind, although they do show 
the general tendencies very nearly as they are. 

Functions of News Service 

As the result of this demand, this recognition of the need 
of more reliable market information, especially as to the meat 
trade, Congress at its last session included in the agricultural 
appropriations an item for the purpose of collecting and distrib- 
uting information as to the prices and movements of livestock 
and meats. The substance of it is this, to enable the secretary 
of agriculture to collect and distribute information relative to 
the numbers of marketable animals of the different classes and 
grades in livestock, grazing and feeding sections, the movements 
of livestock to the markets, the market prices and conditions per- 
taining to livestock, the supply of meat on hand and related 
matters. Any of us who are interested in the exact text of that 
bill will have no difficulty in finding it in the last agricultural 
appropriation bill, or I shall be glad to hand you a copy of it 
after the meeting. 



LOUIS D. HALL 251 

Working- Out a Plan of Operation 

That bill became effective last August, when the agricultural 
appropriation bill was signed, and since that time we have been 
at work on plans for the organization of the work. We have 
conferred freel}^ with all of the different interests concerned in. 
the collection and distribution of this information. AVe have 
conferred with the market committee of the American National 
Livestock Association. We have conferred with the officials of 
the National Livestock Exchange whose president, Mr. McClure, 
spoke to you yesterday on behalf of the commission interests ; we- 
have conferred with the stock yards people, the railroad people, 
the packers, retailers and representative consumers as to the 
lines along which information was most desired by the various 
interests and the plans under which it might most effectively 
be collected and distributed. 

That brings me down to the plan itself. We started on the 
basis that the kind of information which we should obtain first 
is that which is most lacking, and every one has agreed that 
the meat trade is the feature of tli,e livestock and meat business 
on which we have the least figures today. 

When a commission man from the stockyards goes out into 
the pens to sell a trainload or carload of cattle to the packer and 
the first bid and very likely the last bid is 25 cents lower than 
the day before, and he asks for the reason in the decline in the 
•market he is told quite frequently beef market in New York 
City and Boston is off, it is a sick market, and consequently 
the price of beef cattle is lower. There are no published quo- 
tations on the beef trade in the East. 

The commission man has no means of judging whether the 
demand for beef cattle is better than it was the day before or 
not. Consequently, the best he can do is to take the best bid 
he can get and let the cattle go. So from month to month you 
are in the dark as to the supply of meats in storage. 

Cold Storage Figures Already Available 

People have expressed themselves at this meeting within the 
last 24 hours very strongly on that matter of the manipulation 
of the meat and livestock markets by means of the stocks 



252 MARKETING AND FARM CREDITS 

in storage, and fortunately the latter is one of the easiest things 
to get at with the organization of the machinery that the depart- 
ment of agriculture has built up. During the last five or six 
months monthly reports have been issued by the department of 
.agriculture showing the quantities of eggs, butter and cheese 
in cold storage in the United States, and those reports are so 
nearly complete now that they are accepted by the trade 
throughout the country as the best figures of the kind that ever 
have been available. 

Cold storage reports of apples have been published for nearly 
two years, possibly a little over two years, and practically all 
of the large storages in the United States are included in those 
tigures. 

Seeking Facts as to Meats in Storage 

So we immediately set to work to extend this system of month- 
ly reports of products in storage to include frozen meats and 
■cured meats. The stock of fresh meat in the United States is 
an immense thing to undertake to compile and publish. I think 
we will get to it sometime, but we are obliged to work into this 
process step by step and I am glad to be able to tell you that 
our first report on stocks of frozen and cured meats is due to 
be issued either today or tomorrow, showing the stocks on hand 
December 1st, including all of the packing establishments under 
federal inspection in the United States, all of the intra-state 
packing concerns that are of sufficient size to warrant including 
figures in totals of this kind, and all of the public cold storages 
in the United States. 

In order to place information of the daily variations in 
the meat trade at the disposal of the livestock market peo- 
ple and any others who have occasion to use that infor- 
mation, we have opened this week offices in New York, Bos- 
ton and Philadelphia, at which our representatives, Avho are 
men thoroughly familiar with the meat trade, will prepare 
daily reports on the supply and demand and prices on the 
different grades of fresh meats in those cities. All information 
will be wired to Washington, tabulated and arranged and then 
wired to our representatives in the stockyards centers in the 
Middle West so far as we are able to place representatives at 



LOUIS D. HALL 253 

those markets, and also to any other livestock markets at which 
arrangements can be made with officials such as the secretaries 
of livestock exchanges, and to any one else who is willing to pay 
for the telegraphic service. 

Public Will Have Information 

The policy throughout the department in these matters is 
to make the information entirely open to the public. The only 
limitation is that the parties who receive it shall be willing to 
pay for this service so far as it involves telegraphic service and 
so far as it can be sent by mail all that is necessary is to ask 
to have one's name put on the mailing list. 

I intended to say in the outset before describing our plans 
for the livestock and meat work that for 18 months or so a simi- 
lar plan has been in actual operation covering 12 or 14 fruii 
and vegetable crops. The official who has charge of that work, 
Mr. Sherman, is here today and if opportunity offers later on 
I shall be very glad if he might have a chance to tell you some- 
thing about it. I think there are something like 18 branch of- 
fices of that service in different cities in the United States and 
arrangements have been made with all the railroads in the 
United States whereby the division superintendents of all those 
roads telegraph to Washington every night the number of cars 
of certain fruit and vegetable crops that have been loaded on 
each division that day and giving the destination. By that 
means it is possible before nine o'clock every morning at Wash- 
ington to compile a statement showing the movements of those 
crops throughout the United States for the previous day. That 
service has been received with the greatest approval by the en- 
tire fruit and vegetable trade and more particularly the ship- 
pers who are enabled thereby to determine the most advan- 
tageous markets to which to send their products. So successful 
has that service been that we have been besieged during the last 
year with inquiries asking why in the world we cannot do as 
much for the cattle and hogmen as has been done for the fruit 
and vegetable producers. 



254 MARKETING AND FARM CREDITS 

Securing Data on Sales of Meat 

The reports that I have referred to, in speaking of the fresh 
meat trade, will be obtained from the buying as well as the sell- 
ing side of the trade. A man in New York, for instance, will 
■each morning from representative retailers and jobbers who 
buy from the large wholesale concerns, obtain from them the 
prices they are paying, and obtain from the large wholesale 
concerns the prices they are receiving; and from those figures, 
compile an average or range of prices for different grades of 
meats." 

The present system of market reports on livestock no doubt 
is the most complete, extensive and probably the most nearly 
satisfactory of any market reports which are issued on any 
products, unless it be those of grain. The daily livestock mar- 
ket papers and the weekly agricultural papers which carry mar- 
ket quotations for years have been publishing quotations on the 
various classes and grades of cattle and hogs and sheep, which 
enables one to follow the markets with a reasonable degree of 
satisfaction; and it is not the purpose of the department of 
agriculture at the outset at least, and very likely it will be a 
long time if ever before the department will be in a position, to 
issue daily market quotations on livestock, considering the 
large number of grades and classes and the immense expense 
■of handling that information by telegraph, the impossibility 
of getting it to Washington and back through the country in 
time to be of service to the buyers or sellers. The stock will be 
unloaded and sold before the information would be available. 
But there are some things about the daily reports from the stock 
yards in connection with which the government can be of a 
great deal of assistance. 

To illustrate one important feature of that kind, I will men- 
tion an incident that occurred two weeks ago last IMonday, I 
think it was, at the Chicago stockyards. The morning bulle- 
tin on livestock receipts showed 30,000 hogs on the Chicago 
market. A few hours later during the development of the mar- 
ket the bulletin was changed to 40,000 hogs, because the in- 
coming trains were running "hogier, " as the market people say, 
than had been estimated. What was actually known on that 



LOUIS D. HALL ' 255 

morning, or any other, at the Chicago market or any other of 
■our large livestock markets, was that there were a certain mim- 
l)er of cars of livestock reported by the different railroads com- 
ing into the market. The only estimate that could be obtained, 
the only estimate of the number of cattle or hogs or sheep on 
the market that can be obtained under present conditions, is 
based on the total number of ears of livestock coming into the 
market. That is why you often see 28,000 cattle reported when 
the official figures later on show only 23,000, so that the market 
is being conducted on a basis of guesswork. 

I admit that the estimaters do surprisingly well with the fig- 
ures that they have; but here is where Uncle Sam can step in 
.and ask the railroads to furnish information which they are not 
obliged to furnish and have not shown an inclination to fur- 
nish to the stockyards companies or the livestock exclianges or 
anybody else. It is entirely possible to know exactly at seven 
o'clock in the morning, or very nearly exactly, just how many 
.cars of cattle, how many cars of hogs and how many cars of 
isheep ought to arrive at the market that morning, and how 
many of the hog cars are double decks and how many single 
■decks and how many of the sheep cars are double decks and 
how many are single decks, so that when the telegram that is 
sent out from Chicago at seven o'clock in the morning, giving 
the estimated receipts and the market prospects for that day, 
that message will be based on actual receipts rather than on es- 
timated receipts. That can be done through arrangements 
which already have been j)erfected with the railroads. From 
their dispatchers at the passing points from two to three hun- 
•dred miles out of the market, where the bulk of this stuff comes 
through, our office at the stockyards will receive messages show- 
ing the number of cars of every kind of livestock, instead of 
merely the total numbers of livestock cars in those trains. 

So we are establishing this week an office at the Chicago stock- 
yards; and within ten days or two weeks expect to have offices 
at Kansas City and Omaha stockyards. Then as fast as our 
funds will permit and as fast as the efficiency of the service war- 
rants, offices will be located at the other stockyards in the order 
of their importance, together with the demand that seems to 
exist at and surrounding those markets for the kind of infor- 
mation that we will be in position to give. 



256 • MARKETING AND FARM CREDITS 

A Way to Have More Accurate Knowledge 

At present the livestock trade of the United States is based 
almost entirely on the Chicago market. No other market usu- 
ally turns a wheel until they hear from Chicago in the morn- 
ing, and not only that, but every hog buyer at every railroad 
station in the United States, almost to a man, waits for the 
morning message from Chicago before he starts in his force to 
buy hogs, and when you consider that fact — well, I intended at 
that point to say that in .addition to Chicago you very seldom 
see on a bulletin board or in the maiket papers a summary of 
more than six or seven of the markets. Chicago and the river 
points are taken as the basis, but mostly Chicago. In figuring 
the annual summaries of statistics of the markets we find the 
12 principal markets included, sometimes 14, but our Mr. Simp- 
son investigating and making a survey of public stockyards in 
the United States has found 35 or 36 public livestock markets 
at w^hich livestock is sold on commission, and there are about 25 
more of importance at which considerable livestock is bought 
and sold, worthy of the name of civilized livestock markets. 
And just as it would be impracticable to base weather reports 
for the United States on what is happening in the Mississippi 
valley, so we think that although Chicago and the river points 
are a very good barometer indeed of the trade it will be a great 
deal better to have at hand every morning information of 36 
markets instead of 6. And later when the information can be 
organized and promptly handled there is no reason why we can- 
not include 60 markets as well as 30 or 35. 

I w^as astonished recently to be told that the morning esti- 
mate that goes out of this market giving a prospective market 
for that day is lower than the actual market proves to be later 
in four-fifths of the cases; that is, four days out of five the es- 
timated market which is wired over the United States is lower 
than the actual market proves to be. And when you think 
about all of these local dealers starting out in their Fords, as 
well as all of the other centralized markets waiting on Chicago, 
you can realize what that means to the disadvantage of the 
original owner of the livestock of the United States who sells 
on that dav, or on those four davs out of five. 



LOUIS D. HALL 257 

While it will take time to improve the conditions, just as it 
took a long time to establish, an efficient weather bureau which 
would be taken as standard rather than Mr. Hicks' weather 
reports, so it will take some time to get this work built up to a 
point that will be thoroughly satisfactory. But we are thor- 
oughly confident that it can be done, and those with whom we 
have conferred, representing the largest livestock marketing in- 
terests and livestock producing interests in the United States, 
have agreed with us that that is thoroughly practical. I said 
we have no thought of substituting daily livestock market re- 
port so far as the prices of the different classes and grades are 
concerned for what is being done so well already and where it 
takes a force of 30 or 40 men at each market to handle and pub- 
lish that information promptly enough to be of service, but we 
are convinced that within a very short time after the inaugura- 
tion of this plan with our offices in the eastern cities of con- 
sumption and the mi-ddle western public livestock markets, it 
will be possible to show from week to week, at least, the com- 
parative prices of livestock of the different grades and the fresh 
meats and cured meats of the corresponding grades. One can 
then see at a glance whether the variations, the ups and downs, 
in prices of meats are corresponding reasonably close to those 
of livestock, or whether there are variations that call for an ex- 
planation. 

So instead of taking statistics of a year or two ago and try- 
ing to see whether conditions then were what they ought to have 
been, we will follow it from week to week and undertake to cor- 
:^ect any conditions that it is very apparent are out of joint. 

German System of Standardization 

It occurs to me at this point that what the Germans are do- 
ing may offer some encouragement to you as to the feasibility 
of this in case what I am saying appears visionary to any of 
you, because of this departure from anything to which we have 
been accustomed. For many years the Germans have been pub- 
lishing weekly bulletins on livestock and meat prices in which 
they have worked out a very complete classification of livestock 
and meats. They even go so far as to plot the curves from week 
to week showing the relative variations in the raw material and 



258 MARKETING AND FARM CREDITS 

the finished product under letters A, B, C, D, E, and then give 
a key to their classifications, describing them in detail and dem- 
onstrating that standardization and classification is possible. 
The question was raised in this meeting as to whether it is pos- 
sible to standardize cattle or meats. Some doubt was expressed 
as to the possibility of that, but it has already been done, and as 
I see it, there is no question about it wdiatever. 

Reporting Miscellaneous Facts 

I have spoken of daily reports and weekly reports and I have 
spoken of monthly reports on the meat supply, and in addition 
to that montlily report of the meat supply there is a good deal 
of other information which is needed seriously by the livestock 
trade and more particularly by the producers. The number of 
cattle on feed and on grass in the different producing sections 
of the United States is an important thing. I was told by one 
of the largest cattlemen in the Northwest that if he knew what 
was coming out of the Panhandle and out of New Mexico and 
Wyoming, it might make a difference of six weeks in the time 
he would start his roundup. Of course he knows what the mar- 
ket receipts at Kansas City and Fort Worth are, but those total 
receipts show nothing as to the kind of cattle that are being 
received there. By means of the methods that are now used 
by the railroads in determining the numbers of cattle fed along 
their lines in order that they may supply cars at the right time, 
I should say that some railroads, some, do not seem to look for- 
ward much on their car supply. But interviewing the live- 
stock agents of some of the railroads we find that their desks 
are full of figures which if they could only be brought together 
and properly tabulated and analyzed would be of immense 
value to every cattle feeder and everj^ cattle grazer in the 
United States who has a carload or more to ship. Our plan in- 
cludes that feature to be worked, out through the agency of our 
men at the different livestock markets and through reports, to 
be furnished by lists of men who are qualified to give exact fig- 
ures. For instance, we Avill secure the number of cattle for the 
New Orleans feeding district or the San Luis valley; and the 
number of cattle on feed in the cotton seed oil mills district in 



LOUIS D. HALL 259 

the United States, as compared with a year ago or a month ago ; 
and the number of cattle on feed at the beet sugar factories, 
the number of lambs on feed at those mills ; the number of cat- 
tle on feed at the distilleries. All of those and other items, 
which I will not take the time to mention, compared with a 
year ago and with previous montlis, we think will furnish a 
valuable index of livestock market conditions which at present 
is entirely a matter of mystery to all of us. 

The shipments of stockers and feeders from the livestock 
markets to the country is another thing that can be reported 
a great deal more promptly and accurately than is done at pres- 
ent, Mr. Simpson has found in working with the stockyards 
companies, in compiling their monthly reports, that there are 
very few of them that keep the figures of stockers and feeders 
separately from the figures of total shipments. He has suc- 
ceeded in persuading a good many of them to separate those 
figures, and it will be possible to persuade a great many more 
of them to do likewise. A monthly or perhaps a semi-monthly 
or possibly a weekly report of those shipments taken together 
with the other information I have no doubt will contribute just 
as far towards throwing light on livestock movements and con- 
ditions in the United States. 

The bureau of crop estimates which for many years has been 
compiling sundry estimates of the different crops and their 
condition throughout the United States has never attempted 
it with reference to livestock, because their funds have not been 
sufficient to do so. There have been demands from all over 
the United States that monthly estimates of the livestock in 
each county of the country should be made just the same as 
the estimates on corn and wheat, and an arrangement has 
recently been made in the bureau of crops and estimates to 
conduct a report of that kind. It is our plan to bring all of 
this monthly information together into a monthly livestock 
report similar to the monthly crop report that is now issued 
by the department. Lest some of you may be skeptical as to 
the feasibility of that monthly livestock estimate that I men- 
tion, I want to say that we have undertaken at the outset to 
limit the correspondents from whom that information will be 
obtained to practical stockmen and others in the livestock 



260 MARKETING AND FARM CREDITS 

industry, in the different counties in the United States, so that 
it will be expert information and not merely guesswork sent 
in by some county correspondent who is supposed to report for 
all kinds of crops and livestock. 

We are fully convinced that within three months at the out- 
side a monthly livestock report of that kind, including the 
estimates and actual movements of feeders in certain sections 
which feed regularly, the actual numbers on grass in certain 
grazing sections, all can be placed at the disposal of the entire 
livestock industry within a week or seven or eight days at the 
outside after the first of the month; and above all the purpose 
will be to handle this information in such a way that it will be 
of benefit to the stockmen themselves. 

Will Reporting Benefit Producers? 

We sometimes hear people say that all these government re- 
ports do the speculators more good than they do the farmers. 
I do not think it is the sentiment of this meeting that that is 
true of the work, posting them as to how they can use it to best 
what I have said about our efforts to throw light primarily on 
the meat supply and demand, you will recognize that the infor- 
mation we are proposing to obtain will be of such a nature as 
to aid the selling side of the trade as much if not more than 
the buying side of the trade at the livestock markets. Organ- 
izations like this meeting and other organizations of national 
and state scope can be of immense aid in carrying out this plan 
by acquainting the members of the organization with the na- 
ture of the work, posting them as to how they can use it to best 
advantage, and by keeping in touch with us through your offi- 
cials to make sure that we are making no blunders, or at least 
the minimum number of blunders. We are sure to make some 
mistakes but give us the benefit of your counsel and criticisms. 

How to Use the Information 

An illustration of the use of this kind of information came 
to my attention recently. I do not know whether Dr. McClure 
of the National Wool Growers' Association is in the room. If 
he were he could tell you something of the work of that asso- 



M. L. McCLURE 261 ■ 

elation in entirely revolutionizing the market of lambs. Ten 
or fifteen years ago the bulk of the northwestern lambs came 
to market from August to October — possibly August and Sep- 
tember or September and October. The lamb growers recog- 
nized that they were simply cheating themselves by throwing 
all of their product on the market at the same time, and 
through the systematic efforts of that association persuaded the 
members to build sheds and provide feed and have the lambs 
come in February instead of confining their entire lambing pe- 
riod to April and May. And the marketing of northwestern 
lambs has been distributed through five or six or seven months 
— from June to November — instead of dumping all those lambs 
on to the market in a period of sixty days. Although there are 
limitations to the extent to which that can be carried out, na- 
ture has fixed the grazing season and the crop season in such 
a way that we can hope to make the marketing a continuous/ 
feature throughout the year. "What has been done in regard 
to the marketing of lambs can be done with regard to the mar- 
keting of cattle and the marketing of hogs. 



THE COMPETITIVE PUBLIC METHOD OF 
MARKETING LIVESTOCK 

M. L. McClure* 

I want to state the attitude of the National Livestock Ex- 
change on the matter of the federal investigation of the live- 
stock business and packers, incidentally, along with that. Be- 
fore the president of the National Livestock Exchange went to 
"Washington at the request of the market committee of the 
American National Livestock Association, he obtained the con- 
sent of the executive committee of that organization which 
consists of one man from the 17 principal markets in the United 
States. He went to Washington and made a statement before 



* Mr. M. L. McClure, of Kansas City, Mo., is the president of the 
National Livestock Exchange. Speaking for that body his views carry 
weight. 



262 ' MARKETING AND FARM CREDITS 

that committee. At the annual meeting of the National Live- 
stock Exchange held last May, that meeting endorsed not only 
the position taken by its president, but also endorsed the. very 
words that he said at that meeting by a resolution ; and it was 
adopted unanimously. At one time some of the indi^'idual 
members of that association wired to Washington and objected 
to it. However there were about as many in proportion in 
the livestock business themselves, the feeders and the raisers, 
who opposed the resolution as the commission men. 

A scientic method of marketing livestock is just as important 
as the scientific breeding and feeding of livestock. 

If the present system of marketing on the central competi- 
tive markets is the best, it should be supported, and the efforts 
of certain packers in trying to break down the influence of the 
price-making system by going to the country to buy their sup- 
plies should be discouraged. The open competitive system can 
only be sustained by arousing public sentiment through pub- 
licity. Producers must recognize it is to their interest to 
support the open markets and refuse to sell to the packers in 
the country. 

The present competitive system of marketing livestock at 
public, central stockyards is a direct growth of natural laws 
and answered the call of necessity. 

Fifty years ago the method of marketing livestock was for 
the individual to sell to his local butcher and the individual 
had but few animals to market. There was also the drover, 
who bought in certain localities and drove his livestock in larger 
cities. The butchers and drovers respected each others terri- 
tory, and there was not much, if any, competition. The live- 
stock industry then was not an important one. There was no 
publishing of market prices that reached the general public. 

Transformation of Livestock Marketing 

Finally railroads were built and speedj^ transportation of 
livestock and meat products was made possible. Packing 
houses were built; methods of refrigerating and cold storage 
were invented ; the byproducts that had been lost before by the 
country slaughterers now were saved. Then the raising and 



M. L. McCLURE 263 

feeding of livestock from being a side issue on the farm became 
in itself a business of vast importance. Large fortunes have 
been made by the producers and the manufacturers of the 
products, and the consumers have been able to secure at all 
seasons of the year a valuable, healthful food. 

To handle this business stockyards and markets were estab- 
lished at suitable places, selected on account of transportation 
and proximity to the producing territory. These stockyards 
were needed as depots to unload, shelter, feed and weigh stock. 
At these yards buyers congregated ; . markets were established, 
and packing houses built. It became necessary to employ sales- 
men who could be relied upon to classify the stock, and, who, 
being on the market all the time, were familiar with market 
values and were experienced and good traders. Commission 
men became necessary to receive the stock, yard it, pay the 
freight, and see that it Avas fed and watered; and when sold, 
weighed ; and to collect the proceeds for the shipper from the 
various parties to whom the stock was sold, — commission men 
who knew the buyers who would pay for the stock sold to 
them, as well as the shipper. So title was assured to the buyer 
and a knowledge that proper disposition would be made of the 
proceeds. 

How Commission Men Aided Development of Industry 

It also became the duty of the commission men to keep their 
friends in the country, who are their customers, informed in 
regard to receipts and price conditions on the markets. So 
market papers were established to publish the sales made that 
every one who wished could know the price obtainable on the 
different markets. Rules governing the buying, selling, weigh- 
ing, docking, paying for, and generally conducting the busi- 
ness were necessary. Hence, livestock exchanges were or- 
ganized to enforce these rules and to eliminate crooked trading 
and linreasonable charges, and to establish a speedy arbitration 
of disputes and otherwise protect the patrons of the market 
from irresponsible parties. Inducements were made to estab- 
lish new markets and obtain packing plants at them, until now 
there are 17 central markets in the United States where there 



264 MARKETING AND FARM CREDITS 

were marketed in 1915 12,416,750 cattle, 30,784,903 hogs and 
15,108,658 sheep, with a market value of over a billion and a 
quarter dollars. All these were sold under the competitive 
system and the prices published to the world. Local conditions 
at these yards are not able to make the price for the reason 
that all sales at all the markets are published and the buyer 
will go where he can buy the cheapest and the shipper where 
he will receive the best price. Hence, as in wheat, corn and 
cotton, these published market prices practically keep a level 
market all over the United States. 

Present System is Safe and Cheap 

It can be said, for the present competitive system that it is 
safe. The loss caused by irresponsible marketing agents 
through their dishonesty is practically nothing. 

It is cheap ; commissions on stock are only from forty one- 
hundredths of one per cent to one per cent, owing to kind, 
quality and price. The stockyard charges collected by the 
stockyard companies as yardage on stock, based on present 
prices, are from fifteen one-hundredths of one per cent to one 
per cent. 

At all these yards a market is provided for all classes, kinds 
and conditions of livestock, not for just the fat ones but all 
kinds, just so they can walk over the scales; even the deads 
and cripples have a market value. These markets are not re- 
stricted, but are free and any one who wants to buy and sell 
is welcome there. 

Argfument Against Country Buying 

The packer who goes to the country to buy for his immedi- 
ate needs is not an active buyer on the market, going out late in 
the day to bu}^, reducing competition, and thus controlling 
prices. By selling in the country you hurt yourself because the 
packer is a business man and can buy from you cheaper in the 
country than he can on the open market, or he would buy on the 
open market where it is the most convenient. You also hurt the 
whole system as it will restrict the open competitive market 
and every one on it will have to sell cheaper. 



M. L. McCLURE 265 

Buyers bid on two to five times as mucli stock as they get on 
the open market. 

To obtain tlie best results all livestock for meat purposes 
should be offered for sale on some of the open competitive mar- 
kets. To sell at home destroj^s that much competition. Whoever 
buys it does so without competing with any one, and if the 
buyer was compelled to go to the open market, he would have 
to bid against others. 

Livestock marketing cannot be a success with half being mar- 
keted in public with competition and half by private sales. The 
private unpublished market, being unknown, would soon de- 
stroy the value of the publicly quoted prices obtained on' the 
market. 

The price for which every fat animal sells in the country to 
the packers or any one else is based on the published market 
report at some public market. If these public markets were ex- 
tinguished, the country seller would be w^here IMoses was when 
the lights went out as far as values for livestock are concerned. 

Competition Essential to Public Market 

What is said of selling in the country is also true of the sys- 
tem of shipping direct to private packing house yards and let- 
ting the packer set the price he will pay. This way of doing 
TDUsiness is too much of a strain on human nature. The buyer 
is governed by the prices published at the open competitive 
market or the shipper would not get enough to buy a ' ' Henry. ' ' 

The successful public market absolutely depends on the ac- 
tive competition of the buyers. I am sorry to say the competi- 
tion among the fat stock buyers is not as great as it was a few 
years ago. The United States government had inspectors at 
44 fewer plants in 1916 than in 1912. It has been charged that 
the five large packing plants are not very earnest in their com- 
petition, yet there is competition on these open markets between 
the large packers, small independent packers, shippers, feeders, 
exporters and small abattoirs (there being a total of 1,279 such 
plants in the United States). It is not a one-man bid market as 
in the country. 



266 MARKETING AND FARM CREDITS 



Publicity Will Aid Producers 

The free working of the law of supply and demand is all that 
can be asked. We can see the supply that is offered on the mar- 
ket. Now let the roof be taken off of that all can see the de- 
mand. This can only be done by government publicity. 

Meat products are no more perishable than wheat or corn. 
It may cost a little more to store them but not as it would cost 
to hold the stock at home and feed it. Government tests show 
meat can be stored for a period of over two years or longer with 
but little shrink and cost and yet be good food. Hence there 
should not be violent fluctuations from day to day as the supply 
of livestock in the country does not change rapidly. The good 
God who causes the rain to fall, the sun to shine and the grass 
to grow, created the condition that causes the heavy receipt of 
livestock in the fall, which must be overcome by feed or cold 
storage. 

Why Federal Investigation is Needed 

I have favored an investigation by the Federal Trade Com- 
mission of the general livestock situation, the raising of stock, 
the feeding, the marketing and the manufacturing of meat prod- 
ucts. Let us find out about these things in a systematic manner. 
Let the commission tell us after they have made a thorough 
inquiry where the profits are, and what causes the losses. "We 
would like to know why prices in February, 1916, when receipts 
were light and following light receipts were lower for fat cattle 
than they were in October, 1915, when the receipts were heavy 
and following weeks of heavy receipts. 

While the commission has not yet been ordered to make an 
investigation of these matters, the fact of presenting the matter 
to a congressional committee last spring, asking for the investi- 
gation, accomplished much good. It did good to hear from the 
"grass roots," as we say out West. Some of the things com- 
plained about have been voluntarily corrected, and marketing 
has shown corresponding improvement. For this the producers 
and shippers should thank Congressman Borland as well as the 
committees of the various livestock organizations. If an investi- 



M. L. McCLURE 267 

gation will show the packing business to be a profitable one, 
would not that induce others to build plants, there being much 
money now seeking investment? Or why not establish plants 
by cooperation of those who have millions invested in livestock 
and thus create competition? If necessary, do with less live- 
stock, feed less, and have some money invested, that will make 
more competition for what you have to market. 

Stability of Price Demanded 

The federal reserve bank has given us stability in money mat- 
ters. What we need is a method devised to create stability in 
livestock market prices. "Will publicity do it under govern- 
ment supervision? Can competition be created by cooperation 
in establishing more packing plants and by extending the cold 
storage capacity so when there are heavy receipts, the products 
can be stored and sold when receipts are light? This would 
be a great blessing to the consumer, as the additional cost for 
the storage that would have to be paid by the consumer would 
be less than the actual market fluctuations. Some method will 
have to be devised to guard against the avariciousness of the 
average man on this cold storage proposition. However, I am 
not in favor of hasty permanent legislation to correct a tem- 
porary condition. 

There is one thing we can all do now that would help the sit- 
uation without legislative action, and that is sustain the com- 
petitive public method of marketing. Do not -wrreck a system 
that is so well established. If the system is wrecked, it will 
mean chaos. 



268 MARKETING AND FARM CREDITS 



SELLING THROUGH COOPERATIVE LIVESTOCK 
SHIPPING ASSOCIATIONS . 

S. S. Beach* 

The chairman has introduced me as a farmer. I live one 
and one-half miles from the little city of Hutchinson, McLeod 
county, Minnesota. I milk my cows night and morning, and 
deliver my milk at the creamery, and deliver my hogs to the 
cooperative shipping association; and so I come to you as a 
practical, every-day farmer. As I attended the meeting yester- 
day and listened to the different speakers as they discussed the 
different subjects, I began to think that my ammunition was 
not really big enough ; it did not seem that my ammunition was 
the right caliber, or that the gun I carried was big enough to 
shoot very far. Nevertheless, I have come to you with my 
message. It may not appeal to the big ranchman who has thou- 
sands of cattle and a thousand hills; it may not appeal to the 
great sheep grower out in the far west; it may not appeal to 
the feeder, and I am quite sure it will not appeal to the ex- 
stockbuyer. Now, this cooperative movement of livestock ship- 
ping associations, is a spontaneous growth in the State of 
Minnesota. I believe that we have the honor of having had the 
first cooperative shipping association that has developed as an 
organization. It is just like little Topsy in Uncle Tom's Cabin, 
who never was born. It has just ''grow'd". Nobody promoted 
it. There was no Society of Equity behind it, and no guarantee 
or allowance of any state university. Nothing of that sort has 
fostered the growth of this cooperative movement. As I say, 
it is spontaneous. Now, I will give you the history of it. 

About 25 or 30 years ago up in Minnesota James J. Hill, the 
great empire builder, conceived the idea that he would like to 
foster better farming in the Northwest. It was all wheat grow- 
ing country at that time, and James J. Hill, you know, was 

* S. S. Beach is a farmer of Hutchinson, Minnesota and president of 
the Hutchinson Cooperative Livestock Shippers' Association. He is 
also president of the National Bank of Hutchinson. 



S. S. BEACH 269 

one of the great stock growers. He used to come down here 
to Chicago and walk off with blue ribbons for his fat stock. 
So he wished to get the farmers along his lines of roads inter- 
ested in better stock growing, and therefore he put a thorough- 
bred bull at every station along the Great Northern railway 
from St. Paul to St. Vincent. 

How Purebred Bulls Started Cooperative Shipping 

One of those thoroughbred bulls was placed in a community 
of Scandinavians and Irish in the vicinity of the little village of 
Litchfield, in Meeker county, Minnesota; and instead of let- 
ting those bull calves die at the strawpile, or selling them as 
carrion, etc., as a great many did, this thrifty community raised 
a few carloads of highgrade steers in that vicinity. They felt 
as if they were too good, or the local stockbuyer was discriminat- 
ing against that kind of stuff, and did not really give them a 
square deal; and Mr. H. L. Halvorsen and his farmer friends 
said, "Here, we will ship this stock ourselves, and we will go 
down to South St. Paul, or to Chicago, and put it on the market 
ourselves." So they did, and the result was very satisfactory. 
Then the success of that arrangement was passed around through 
the community, and so the other people around there, their 
neighbors, said, "Mr. Halvorsen, next time you ship we want 
to go in with you." And they did, and the result was, Mr. 
Halvorsen tells me, that the first year he shipped 12 carloads 
of stock for his neighbors. 

It kept on growing in that way, until it got to something like 
30 carloads of livestock that were shipped through Mr. Hal- 
vorsen. After it (got to that point they conceived the idea that 
it would be a good proposition to make it a regular organization, 
so they organized the present system that exists as the Litch- 
field Cooperative Shipping Association, and drafted their by- 
laws, and started out as an association. They have kept right 
on doing business, and that association is still going on and 
shipping about 200 carloads , of stock a year. 

Hutchinson, McLeod county, Minnesota, is just 22 miles from 
Litchfield. At Hutchinson, Minnesota, we had achieved satis- 
factory results along several lines of cooperation. We had 



270 MARKETING AND FARM CREDITS 

our cooperative insurance that had been going on about 35 
years, with two strong companies carrying any risks in the 
community at 10 cents a hundred. We succeeded there. Then 
came our cooperative creamery, the second oldest organization 
in the State of Minnesota, turning out 250,000 pounds of gilt- 
edge butter, that sells for 37 cents a pound, on the average, 
during the year, and paying 47 cents a pound for butterfat. 
That is what we achieved along the line. of cooperative cream- 
eries. Next came our cooperative elevators, which has been 
going for about 15 years, and is one of the very successful co- 
operative elevators among the 322 that we have in the State 
of Minnesota. We thought then, since we had succeeded along 
those lines, why not have a cooperative shipping association? 

Starting An Association at Hutchinson 

And so I conceived the idea myself that we would organize 
a shipping association at Hutchinson. I started the ball rolling 
this way : I put a notice in the Hutchinson Leader, stating that 
on next Thursday there would be a mass meeting of the coopera- 
tive creameries at Hutchinson, for the purpose of considering 
the organization of a shipping association. Well, it turned out 
that perhaps 40 or 50 men, representative farmers of that com- 
munity, got together, and we had Mr. Halvorsen come over and 
explain the workings of this cooperative movement. It sounded 
so good and so practical that we just organized right then and 
there on that day, and elected our board of directors. Then 
we said : 

' ' Mr. Halvorsen, when are you going to ship your stock 1 ' ' He 
replied : 

"Next Tuesday". 

We went up in an auto and stayed with Halvorsen all that 
day, and he shipped his carloads of stock, and it was so satis- 
factory, and we heard no complaining or kicking among the 
farmers, everybody appearing to be satisfied, that we came right 
home and put our shipping association to work, and it was in 
operation inside of a week. 



S. S. BEACH 271 

Shipping Association Easy to Form 

Now I am going to tell you liow easily it is done, and how 
simple it is. This organization required no capital. It did not 
have a dime of its own, the one we formed. I dug right down 
in my own pocket and took out 50 cents to buy the first minute- 
book of the association. I went over to the Leader office and 
got credit for the first dodgers that I put out to advertise the 
matter. They trusted us for the advertisements. So, as I say, 
it requires no capital to start with. 

Inside of a week I put out a notice about taking stock under 
the cooperative movement. The result was that the very first 
shipment, we had two carloads of stock that came into the ship- 
ping association. Now, I want to tell you about the conditions 
that existed in our vicinity, and what we sought to remedy. 
What we sought to do was to eliminate seven stock buyers who 
were buying stock in our vicinity, driving six days in the week, 
with seven livery teams, driving perhaps a 1,000 miles over 
the country in order to solicit the stock which was being sold 
each week. I have made an estimate that if we took in 10 car- 
loads a week through our association, with the old conditions 
prevailing tliat existed 5 years ago, the buyers would have to 
drive 1,050 miles. Now, that is an economic waste to any com- 
munity. Those buyers cannot go around that way and spend 
their time for nothing. They have got to have a profit. I do 
not think that the average stock buyer is a crook, or a thief, 
or getting abnormal profits or anything of that kind; but he is 
a supernumerary now under this new economic condition. So 
with this association we have eliminated six of those men, and 
we took one, the seventh, the straightest, most conscientious and 
most obliging — the best mixer — ^and made him our buyer, our 
manager. "When we elected him and appointed him as buyer, 
we put him under a bond of $5,000, and we put our treasurer 
under a bond of $5,000. 

After we got this organization in shape, and got these four 
men appointed, and got everything under way, we were ready 
for business; and we began to ship stock. Now, I will tell you, 
the fight went on in lively fashion. Those six stock buyers died 
hard. They were not lightweights, either. They were shrewd 



272 MARKETING AND FARM CREDITS 

business men, and some of them were heavyweights financially 
in this community among the farmers ; and they died hard. But 
they did die and we had no more of them in the community. 

Result of Three Years' Business 

At the close, as I say, of that first year under this association 
we shipped 179 carloads. The next year we shipped 202 car- 
loads, and the next year 225 carloads, and this year we 
expect to ship in the neighborhood of 300 carloads through 
this shipping association. In our association we farmers 
did not know that we had any grievance against the pack- 
ers at all. We did not realize or think that we had any 
grievance against them, because the stockbuyer never told us 
anything about it, that there was any discriminating in 
grading, and that we did not get a square deal all along the line. 
But let us see. Up there in our shipping association, as our 
buyer goes down with a shipment, we farmers go down there 
with him. I will tell you how we go down there. If we ship 10 
carloads to South St. Paul, each car is entitled to have a man 
on a pass. And so our buyer takes the farmers down to South 
St. Paul, and they go down on the markets and see the stuff 
sold. The farmers are educated men. They know a whole lot 
more about the stock business than they did five years ago. 
They go down on the markets, and they know the difference be- 
tween good stuff, medium stuff and poor stuff, and how to grade 
calves, and how to grade hogs. They have learned all those 
things. 

Something Wrong- at Central Markets 

So our farmers began to wake up to the fact that there was 
something wrong with the packers down there at South St. Paul ; 
but the grievance is not so serious yet that we are grieving over 
it very much. But I will say to these big shippers and all these 
big stockmen, and others: You want help, do you not? You 
want sympathy? You want votes? You want us to line up all 
along the line? Well, now, we 'are going to do it, because we are 
organized. These associations have grown so rapidly that we 
have got 300 that have reported to the agricultural department 



S. S. BEACH 273 

at South St. Paul ; but I was talking to ]\Ir. Wilson,* and I said, 
''Mr. Wilson, jou have not enough. How many have reported 
from McLeod county ? " He said, ' ' Four. ' ' I said, ' ' They have 
got eight." "How many have you got reported from Carver 
county ? ' ' He said, ' ' One. ' ' I said, ' ' They have got five ; I know 
it." That was in my own neighborhood, and I knew those 
things. So I have no doubt that in the State of Minnesota there 
are no less than 600 of these shipping associations that have 
grown up in the last five years. It has been so popular and 
grown so rapidly, that the State of Minnesota, through the ex- 
tension division of the agricultural department, has taken it 
up, not to agitate, not to send men out to advise these farmers 
who are organizing shipping associations ; but when the farmers 
have discussed this matter, and come to the conclusion that 
they want a shipping association in their vicinity, the State of 
Minnesota sends a man out. And so the State of Minnesota 
had me out on the road for three years, three winters, answer- 
ing the calls of these farmers all over the State of Minnesota, 
to come and tell them how to organize these shipping associa- 
tions. Therefore, I have to my credit something like 60 in the 
State of Minnesota that have organized in the last three years. 

Handling Clerical Work 

Now, at this stage of the game I would like to explain to you 
about the clerical work of this proposition, and just how sim- 
ple it is. It is just this simple: Mr. Smith says to Mr. Jones, 
"We are going to ship our stock together;" and in doing this 
thing, when they organize this association they draw up a set 
of bylaws, which are very simple. I have a copy of them here 
with me, and if any of you people are interested enough to 
desire to carry this gospel back to your homes and introduce 
them among your farmer friends there, just write to the Uni- 
versity of Minnesota and get Bulletin No. 156, which explains 
this thing in detail. We have developed a system of account- 
ing, very simple, indeed, so that any ordinary man who can 
read or write, and knows the multiplication table, can keep these 



* Mr.. Wilson is in charge of agricultural extension work of the Uni- 
versity of Minnesota. 



274 MARKETING AND FARM CREDITS 

small accounts, and keep a strict account between the patrons 
of the association and the association. I am going to show you 
just how simple it is, and how it works out. Let us take John 
Smith. He lives everywhere, and is a very well known person. 
John Smith is the first man to come to the local yard with his 
stock on Monday morning. He takes it in ]\Iondays and Thurs- 
days, twice a week. He comes there first with his stock. His 
stock is weighed. Our manager says to Mr. Smith, "Your 
name is Smith. Your postoffice address is Rural Route so and 
so. You have five steers." That is the number, we will say, 
and they are weighed. Then the weight of those steers is put 
down here, and the number of the steers; and Mr. Smith being 
the first man in in the morning, he is Patron No. 1 for that day, 
for that shipment; so down in a little pamphlet, specially 
printed for such business, he puts the Roman numeral 1. After 
those steers are weighed, and when they are on the scales, our 
manager takes a pair of shears and cuts on the hip of each ani- 
mal a hair brand, which is his number. No 1. Those steers carry 
that brand with them to South St. Paul. 

Now, suppose that Mr. Smith also has 10 hogs. Those hogs 
are weighed, and the number of the hogs is put down, and the 
grade of hogs. Now, we grade hogs there at our local market. 
If they arei such as weigh about 150 pounds up to about 300 
pounds, and such as are top hams, they are put down as No. 1 
hogs, and will sell for a certain price on the market. Our Man- 
ager is down there every week and he is posted. He knows 
about what hogs are top hogs, and so if those hogs comply with 
that description, he puts down the No. 1, indicating that they 
are No. 1 hogs, and what they weigh, — 10 hogs at 200, 2,000 
pounds. Those hogs are not marked. They are sold by grade. 
So that man, Mr. Smith, has got 2,000 pounds of hogs, all No. 1. 
That is all put down. Now, suppose Mr. Smith also has a 
springer, a cow. She is weighed, and her brand, No. 1, is put 
down on this tablet. After all of Mr. Smith's stock has been 
delivered, weighed, graded, branded and turned into the stock- 
yards, that deal is closed for that day. The manager tears off 
the slip and give that to ]\Ir. Smith, and that is all that IMr. 
Smith gets until that stock is marketed in South St. Paul, or Chi- 
cago. . Then the returns come back, and all overhead charges are 



S. S. BEACH 275 

charged up against that shipment, and Mr. Smith gets all there 
is in it minus those overhead charges. All intermediate profits 
are eliminated. We do not need any profits in an association 
where, as I told you, we do not need any money. 

Protection Against Losses 

There is, however, what might be termed an exception to that, 
which I will explain to you. We have a small reserve fund, or 
a sinking fund, as we call it, so that in case these animals that 
Mr. Smith brought should be killed, crippled, or something 
happen to them on the way, either while in the hands of the as- 
sociation, or in transportation, we can pay him for that stock, 
minus the overhead charges. We have at the present time about 
$500 in our reserve fund. I came down on the way here with 
our manager to the South St Paul Yards with a consignment 
of hogs, and I said to him: 

"Ed, how much have we paid out of the reserve fund this 
year for losses?" 

"We have just lost two hogs; that is all we lost last year,, out 
of over $350,000 worth of business," he answered. 

Now, I say it is necessary to have that fund. We originate 
it in this way: According to our bylaws, we may take out one 
cent from every 100 pounds of shipment, and put it into that 
sinking fund for that purpose. But we do not do that at 
Hutchinson, Minnesota. Our stockbuyer has learned the busi- 
ness so well that he has learned to take advantage of conditions 
as they exist on the market. He takes advantage of those con- 
ditions, because he has learned about how much it costs to ship 
different grades of hogs and cattle under normal conditions; 
so he fixes an arbitrary rate that he charges up to that ship- 
ment. If all those conditions are favorable, or more than fav- 
orable, he throws it in as a profit and throws it into the sink- 
ing fund. 

Now, I will tell you how he makes that profit. He takes an 
arbitrary rate on a maximum carload, 22,000 pounds on a 44- 
foot car, and that would cost, from Hutchinson, Minnesota, to 
South St. Paul, at 11 cents a hundred — call it 20,000 pounds 
as a maximum, that would be $11 — that it would cost to ship a 



276 MARKETING AND FARM CREDITS 

carload of hogs from Hutchinson to South St. Paul, of 20,000 
pounds. So he charges up that shipment at $11. But if he can 
put in that two or three or four thousand pounds more, of 
course, he does it; and the presumption is that that is saved, 
because if he has to check out the minimum, or less than the 
maximum, it would be a loss. So there is that over-freight, 
which he throws into the sinking fund and calls it a profit. You 
know, shipping big carloads it does not cost any more to sell a 
36-foot car loaded beyond the maximum, for commissions, than 
it would to sell a small car at the maximum. So he loads these 
big cars, and takes out all commissions saved in that way; and 
that is a clear profit. That is absolutely a clear profit, and he 
throws that into the sinking fund as a profit. And also, on the 
switching charges, it does not cost any more to push a big car 
than it does a little car ; so that if we can ship a big car, we save 
just that much more, and throw that into the sinking fund. So 
that in that way we have created, under those conditions, our 
sinking fund, which pays whatever losses there are. 

Paying the Association Manager 

There was one thing I intended to tell you about, but over- 
looked, and that is with regard to paying our buyer. We pay 
our buyer six cents a hundred pounds on the whole weight. He 
pays his own expenses to and from the market. He hires his 
own helpers at the market, the boys to help load the cars; and 
he hires his own stenographer. You say, "Oh, my, my! That 
is a whole lot to take away from that man. He does not make 
much out of it." Well, the first year he got $1,500 or $1,600 
out of it. He did not have to have any clerical help then, for 
it was not quite so large a volume of business. The next year 
he got from $2,200 to $2,300. This last year he got between 
$2,600 and $2,700. This year he is going to get more than 
$3,000. And, as I say, he pays all his charges out of that. 

Now, if you are going to organize shipping associations, I 
want to warn you right at this stage of the game not to hire your 
buyer on a salary; for if you guarantee a man $1,000 or $1,500 
and the volume of business does not come up to expectations, 
where will that money come from? Hire him on a commission 



S. S. BEACH 277 

basis, and then he goes in as a copartner with the men for whom 
he is working. 

Mr. Lasater (of Texas) : Is he a buyer or a shipper? 

Mr. Beach: He is just a shipper, not a buyer. I have been 
calling him a buyer, because that is what he was before he be- 
gan working with us; but the expression is really a misnomer. 
We do not buy any stock at all. I want to make that very clear. 
We do not buy. Now, I want to touch a little on that. When 
we first started out we had a cosmopolitan population up there, 
— Germans, Norwegians, Polanders, and everything else that 
goes to make up a cosmopolitan population. Some of those old 
country people are very conservative, and they were a little bit 
fearful about letting their stock be taken into the hands of this 
association, with this little slip for their only pay. At first they 
hesitated a little, and so when they brought in their stock they 
insisted upon having the cash. So we did pay out cash. Now, 
you say, "Well, Mr. Beach, where did the cash come from, if 
you did not have any money to advance to those men ? " It hap- 
pens this way: I check up the business every month, I go over 
and check up the business of the association, and I am surprised 
to find that we have got a bank account, subject to check, in the 
two banks, the Farmers' National and the Bank of Hutchinson. 
I tell you, the banks like this business, because it meant keeping 
a nice balance there; and at one time I found $13,000. I have 
found from $10,000 up to as high as $13,000, subject to the check 
of the association. 

But that is not the sinking fund that I told you about. It is 
this way : That stock goes down to South St. Paul ; it goes down 
on Monday. It is sold on Wednesday, and our buyer, as I call 
him, comes back on Wednesday night; and on Thursday he goes 
to the bank and deposits the drafts for that shipment. Then he 
sits down and figures up the cost of the shipment, and figures 
out what every man's stock has brought, and sends out one of 
these statements, a complete statement of the transaction, and 
with it he sends a check for the consignment. Now, you see, that 
check is on the road about a week before it gets to the farmer. 
That draft lies there all the time in the banks. 

Now, I will tell you another thing: Up there in that dairy 
country, where we are doing these things, we have got about 



278 MARKETING AND FARM CREDITS 

$5,000,000 worth of money belonging to the farmers there that 
they have got on deposit in banks ; and they are pretty thrifty 
fellows, and have got so much faith in this association that they 
do not cash in very often. I was surprised when I checked up 
to find what I did find. One of the things I check up is out- 
standing checks, and I sometimes find five or six or seven thou- 
sand dollars ' worth of such checks ; and I also found a check the 
other day of $305 that had lain there a year. The farmer just 
thought it was good, and he was a conservative fellow, and he 
did not cash it. So all the time we have got that fund lying in 
there to do business with. 

So when those farmers wanted money advanced, we had what 
we called an advanced check book, and we just gave the fellow 
who wanted his money a check, and that was paid for, and the 
man got his money. But they have got so much faith in the as- 
sociation now that that thing does not happen any more. In my 
checking up I have not found an advanced check cash in two 
or three years, because they have got so much faith in that line 
of business. That thing is done away with. 



THE FARMERS' COOPERATIVE PACKING PLANT 
AT ROCKFORD, ILLINOIS 

F. A. Bingham * 

The Farmers' Cooperative Packing Company of Rockford is 
one of the first which was organized in the United States. We 
enjoyed certain advantages in the building up of that particu- 
lar cooperative packing plant. We were able to buy a very large 
plant, one of the best in! the United States, that was already 
built. We bought it because it was in an estate, and had to be 
sold, and we saved about $200,000 or $250,000 on the actual 
value of the plant at the time we bought it, so that we were able 
to organize for only $400,000, where, as a matter of fact, if we 
had been compelled to build the plant brand new, it would have 
been necessary to organize for nearly a million dollars. 



* Mr. P. A. Bingham was one of the promoters, and is first vice- 
president of the farmers' cooperative packing plant at Rockford, Illi- 
nois. 



F. A. BINGHAM 279 

Features of Wisconsin Law 

We organized under the Wisconsin law; for this reason: I 
think it will be conceded everywhere, where people are posted 
upon these affairs, that the Wisconsin cooperative law is the 
model law of the United States regarding cooperation. Some 
of the special features are these: In the first place, no one 
stockholder and no one member can have, under any circum- 
stances whatever, to exceed five shares. No one person can 
have, under any circumstances whatever, more than one vote. 
There is no way that that can be avoided. No person can draw, 
as a matter of dividends, earnings upon his money, regardless 
of the earnings upon his buying or selling to or from the plant, 
to exceed eight per cent. Those are the principal features. 
The reason for that is manifest. In the first place, you can- 
not have that matter controlled at any time by any combination. 
You can only have one vote in your hands, and you cannot vote 
by proxy, although you may vote by United States mail, if you 
are not able to be present; but no one person, under any cir- 
cumstances whatever in the world, can have but that one vote, 
just the same way that a man votes for the president of the 
United States. That is fair, i^ it not! Now, if you are am- 
bitious, and want to put money in there to control it, you are 
not greatly encouraged to do that, because under no circum- 
stances, no matter how much the enterprise may make, can you 
draw out to exceed eight per cent. That is a business proposi- 
tion. 

Criticism of Illinois Law 

Illinois attempted to pass such a law. At the last session of 
the legislature, you will find, if you will consult your statute 
book, that the legislature attempted to pass a law, or rather, 
told the farmers, perhaps, that they had passed a law, which 
was practically an exact copy of the Wisconsin law; but there 
was a mistake. They made a fatal error. What was it? They 
said, "As in any other regular corporation, the charter shall 
not issue until one-half of all the shares are sold, and 50 per 
cent of that paid in cash." 



280 MARKETING AND FARM CREDITS 

Now, that is all right for a $2,500 creamery, or perhaps a 
$5,000 store or elevator or something of that sort. But when 
it comes to organizing a cooperative packing company, with four 
or five thousand shares, which will take anywhere from a year 
to 18 months to organize, and with nobody with any authority 
in the world to spend a cent or make a contract of any kind, 
of course it is very evident we could not operate under that 
law. So it was necessary for us to go to Wisconsin and secure 
a charter. 

As soon as our stock is subscribed, however, we intend to 
waive or discard the Wisconsin charter, and take oTit a char- 
ter in this state, because the operations under a charter in this 
state are all right, being practically the same as in Wisconsin. 
As soon as we have the stock subscribed, we are going to do 
that; but we could not organize and build up and buy a plant, 
and do the things that were necessary to be done to organize 
at that time. 

It will cost you, under all circumstances, at least $100 to get 
into, for you cannot buy less than one share or more than five 
under any circumstances; but if you buy a single share you 
are a member, and that will cost you at least $100; and if each 
man takes one share, there will be 4,000 members in all in the 
Rockford Cooperative Packing Company; but of course there 
will never be that number, because there are many who will 
buy five shares, four shares, three shares, and two shares. But 
it is a true cooperative packing plant, and for not less than 
$100 or more than $500, it is easy to be seen that you put your- 
self in the position of being an absolute owner of a packing 
plant. 

Big" Profits of Big Packers 

Is there any question in your minds about there being profit 
in a fairly well conducted packing plant? I do not think any 
of you doubt it at all. If you do, read the papers of recent is- 
sue, and see where one of our friends, with $20,000,000 of cap- 
ital, just divided $80,000,000 of surplus among the stockholders 
of the company. I do not begrudge that to them at all. I am 
glad of it. The only thing I regret is that I was not one of the 
stockholders, that is all. But there are such things coming up 



F. A. BINGHAM 281 

every day. It will soon be January 1, now, and you will read 
in the newspapers what these men and other men have made in 
net profits, for they have to report to the United States gov- 
ernment, and you will not read of any small profits either. It 
will run up into such figures that not only will they astonish 
us, but stagger us when we look at them. 

Now, there is no question but what there is a handsome profit 
in the packing business. But, on the other hand, there is no 
truth in the statement that it is absolutely all a matter of vel- 
vet and roses. Your path is not going to be a bed of roses in 
operating a packing plant, but it is simply a business proposi- 
tion. You go to some of your bankers and ask them. They 
are the fellows who will tell you. Ask any one today, outside 
of the three banks in Rockford, about the Rockford Coopera- 
tive Packing Plant, the Farmers' Cooperative Packing Plant, 
and their answer will be in substance about like this: "Oh, 
well, if it is managed all right, and run all right, it will be all 
right. ' ' 

Of course it will. But what are the chances of operating it 
all right, and running it all right? They are first class. 

We had the pleasure of shipping into the plant the day be- 
fore yesterday our first carload of livestock. They will be 
killed Monday. We are only going to start in a very small way, 
because we have still got a considerable amount of stock to sell. 
Most of it is sold by notes, and consequently the notes are not 
all ready money, but they are all good; so we must move, 
though, slowly and carefully. 

Employing a Working Staff 

Now, what have we looked out for in advance? These things: 
We have a man who is not excelled by any one in this state to 
operate the office end of the proposition. He is already secured. 
He is an expert. We have a man to operate the mechanical 
end of it who is not excelled by any one in this state. We have 
a man to operate the stockers' department who has had years 
and years of experience, just as these other gentlemen have, 
and he is not to be excelled anywhere. He is the best man we 
can hire. We have a man for the fertilizer department who 



282 MARKETING AND FARM CREDITS 

has similar qualifications, and we are hiring man after man,, 
and we find the right men, who can -take care of the right end 
of the business, each man his own particular end of the busi- 
ness; and when we start, we are just going to go right along. 
"With regard to the question of marketing the products, there 
is nothing to it. There is no use of my wasting any of your 
time on that. You know that today there is a good market for 
all the finished products that we can produce, and a thousand 
others. 

Now, this other question is going to come up, too, — the ques- 
tion of the big packers. Oh, yes, the big packers, the same kind 
of boogaboo that a little child sees in the black corner. The 
farmer sees the boogaboo of the packer. Did the packer ever 
hurt you? He never hurt me, I used to associate intimately 
with one of them, and I sat beside him in board meetings, and 
he was just as nice a fellow as I ever saw in my life, and just 
as kind-hearted; and it is the same with all the rest of them 
today. They are not going to hurt you, but they Avill cooper- 
ate with you if you will cooperate with them. Do not forget 
that. They are making the prices for you, and they are not 
going to be bothered with any little picayune business of yours,, 
killing 500 or 1,000 hogs a day. Today there are almost 100 
independent packing plants in the United States, and I defy 
any one to show me, by real honest proof, that any one of the 
great packers has interfered with them in any way, shape, 
manner or form during the last two years. I have no sympathy 
with the man who gets up here and tells you, "These $80,000,- 
000 trusts are just eating you alive, killing you, and getting 
verything that you have got," but does not give you any proof. 
Such generalities as that do not help us a bit. 

Wliat we should do is to use what little gray-matter we hap- 
pen to have up here, and get down and act in a common sense 
way in our business, just as we do when we plan our govern- 
ment. If you think the packers are going to bother you, gO' 
down there and talk with them, and see if you do not find as 
fine a group of gentlemanly, straightforward men as there is 
in the world. Instead of doing nothing but planning to hurt 



F. A. BINGHAM 28^^ 

you, they have built up a wonderful business that has made 
this country what it is, more than any other one thing in the 
world; and they are entitled to big profits. 

Packers Make the Prices 

Now, the only thing is this: They are getting a big profit. 
Why? Because they are just like you and me. That is the 
only reason they are getting big profits, because they are just 
like you and me. Now, that they are leaving the doors wide 
open, they make the price of the livestock, and they make the 
price of the finished product. It is true, of course it is true, 
and you would do the same thing, too. Day after day great 
quantities of livestock come into the packing houses, and they 
knock the price down. Would you not do the same thing? 
Yes, of course, you would. And when they have it all in the 
cellar, they naturally put the price up. Would you not do the 
same thing? Of course you would. Which one of you farmers 
will raise your hand and tell me that when you can get 95 
cents a bushel for your corn, you will sell it for 75 cents a 
bushel? You do not need to tell me anyway, because I would 
not believe you. I am a farmer myself, and if I can get 95 
cents a bushel for my corn, I tell the fellow who wants to buy 
it that he ought to make it 95%, and that is just what you do. 
The packer does the same thing. You have no business to kick. 
What you want to do is to get into the game yourself. 

Now, we have got our packing plant going. Understand, I 
am not here trying to get you to come into this proposition^ 
because none of you are near enough. We only take farmers 
within 50 miles from Eockford, but we do not get all the 
farmers, by any manner of means. We have studied this mat- 
ter out carefully and thoroughly, and we know that by going 
out approximately that distance we can get a percentage of the 
farmers who will average approximately the rate of a certain 
number of hogs. We have worked this all out in a scientific 
way, and when we have secured approximately 3,000 or 3,500 
people, we will have for the plant, for the year 'round, approx- 
imately what we can take care of. 



284 MARKETING AND FARM CREDITS 

Capacity of Rockford Plant 

Our plant has a nice and easy capacity of 1,000 hogs a day, 
250 head of cattle, and as many sheep and calves. There will 
be days when we can kill 2,000 and 3,000 a day. There will be 
days, however, when we will not kill 500; but it will even up 
aiicely. We have 23 acres of land beautifully located, with 
three switch tracks, giving us direct connection with all the 
roads of Rockford, so that everything can go along very nicely. 
We will be able to take care of our business, and have no trou- 
ble about it. We are going to have our regular shipping days, 
and we will have a man at the different stations, and he will 
be hired on salary. There is another time when I do not agree 
with my friend here. He says, "Do not put him on a salary." 
I say, "Hire him on a salary." Now, if you can tell which 
one of us is right, you just whistle. But I say, hire him on 
salary. Why? We are going to keep him working six days a 
week. He is going to be at Station A today, at Station B to- 
morrow, at Station C the next day, at Station D the next day, 
etc. ; and when he is not going around looking at livestock, he 
will be busy at the plant, for there will be plenty for him to do. 

Now, then, you must pay the freight to your own packing 
plant. Suppose it was on your farm; what would you do? 
You would put the stuff in there, kill it, and then market it ; 
but here you cannot do that. Now, by combining, and letting 
this great plant take care of the matter, you, a small individual, 
have all of the advantage that the big fellow has down here. 
You pTit your livestock in there, and you eliminate six of the 
«even charges. Is that not good enough? I am sorry that my 
friend here could not tell you that you eliminated anything 
except a part of one charge, and that was with the very fellow 
who ought to be helped. While you have your local shipping 
association you cut out your home man. You do not want to 
•do that, although there may be some reason for it, but ordinar- 
ily there is very little reason for it. 

We charge the local buyer many times with getting a large 
amount of money, and he does not get very much. He is 
guided by the conditions, and they may be quite different from 
the conditions surrounding the shipping association. The ship- 



F. A. BINGHAM 285' 

ping association man gets so much money, win or lose. It is a 
sort of "lieads I win, tails you lose" proposition. He ships it 
down there, and then whatever it sells for, he gets so much 
profit, after the expenses are taken out. 'i'our Ic^al buyer must 
buy of you and pay you your cash today, and then if the inar- 
ket goes down 50 cents a hundred before he gets to market, he 
has lost his expenses, and some beside, to say nothing of a pos- 
sible profit. "With the shipping association, of course, you are 
taking your own chances. 

Cutting Out Needless Expense 

Now, with this local plant you cut out all those expenses. 
You put your livestock into your own plant, and before you 
ship it from your station you get your check for it right there^ 
just the same as you get it anywhere else. We send our man. 
out to the stations, and he is there and meets you; in most 
cases this has been the arrangement, where there would be a 
disagreement, — because there is always a disagreement now 
and then. You have been told here by men whom I could not 
contradict,^ — ^and I would not want to, because I know that 
they are reliable men, — that no two stockbuyers will go through 
a car of stock and classify the stock alike. "What does that 
mean? Well, ask me another question, and let us see what it 
means. A gentleman here told me yesterday that in a single 
carload there was frequently 19 classes of beef. But let me 
ask you: Did you ever go into the butcher shop and find 19 
different prices at which you could buy meat? No. But the 
situation is this : We are never going to find a man who is an- 
gelic enough so that he can absolutely classify everything to 
suit everybody. What will we do? Well, the average man is 
satisfied when he gets reasonably near what he thinks his stuff 
is worth. As a matter of fact, I happened to be present when 
the first carload of stock that we bought the other day was 
bought. I was not buying, but I was there, and saw both sides. 
There was not a question raised at all ; they agreed in five min- 
utes on the real value of that stuff, and the man received his 
check, and said that he was getting at least $60 more than he 
could possibly have gotten for the same carload of stuff shipped 
into Chicago, or sold to the local buyer. 



286 MARKETING AND FARM CREDITS 

And If the Plant Does Not Pay? 

Now, you are going to put your livestock into your plants, 
and you are going to kill it, and put it into the finished prod- 
uct, and put it on the market, with a splendid prospect of mak- 
ing 'a good profit. But suppose you do not make any profit, 
gentlemen? Suppose you do not make any profit in your pack- 
ing plant in a whole year, but just break even. Now, it would 
be a mighty poorly managed packing plant that could run, with 
the capacity of the Kockford cooperative plant, for a year and 
not make some money, with plenty of working capital, which 
they will have. They will not owe any man a dollar in tlie 
world, but they will have plenty of working capital, with the 
plant all paid for. And if they do not make a dollar in a year, 
•or a good sum of money, it would be a wonderful thing indeed. 
But if they do not make a dollar in the world, you have cut 
out six of the seven middlemen's profit in shipping your own 
stuff into your own plant, as though you owned it on your own 
farm, and you will have soon received back, in the saving on 
those six profits, much more than your share of stock ever cost 
you. So that I say, we ought not to waste very much time in 
worrying over that proposition, but what we should do is to 
get together, organize better, build more cooperative packing 
plants, like they are doing in some of the European countries. 



COOPERATIVE PACKING PLANTS 

Charles W. Holman * 

The National Agricultural Organization Society, which I rep- 
resent, found it necessary a few weeks ago to inaugurate a sur- 
Tey of the cooperative packing house industry in the North- 
western states and I promised Secretary "Wallace to come over 



* An address by Charles W. Holman, secretary of the National Con- 
ference on Marketing and Farm Credits from its origin and of the 
TvTational Agricultural Organization Society, to the Corn Belt Meat Pro- 
ducers' Association in Des Moines, January 24, 1917. This address is 
reproduced on account of the immediate importance of the topics 
treated. 



CHARLES W. HOLM AN 287 

here and tell you just what we might discover in this connec- 
tion provided we were able to make any progress by the time 
that this meeting was to be held. I am simply going to 'tell 
you what I have found from the point of view, we might say, 
of a man who expected to invest in one of these concerns. 

The last three years have witnessed a peculiar reaction on 
the part of the livestock producing interests in this country 
towards the packers. In addition to the attempts of associa- 
tions such as your own through the market committee of the 
American National Livestock Association, and the National 
Conference on Marketing and Farm Credits, of which I am sec- 
retary, to secure a cost finding investigation of the livestock 
industry from "calf to plate," certain groups of farmers and 
cattlemen have thought that they could establish packing plants 
and abattoirs in competition with the great packing interests 
of this country. This unrest on the part of our livestock pro- 
ducers has made them peculiarly susceptible to promotion ef- 
forts from the outside. Accordingly, when several groups of 
shrewd promoters— men who make a business of starting enter- 
prises for other people to carry on after them — have gone into 
some of the richer states they have found the farmers an easy 
prey, and they have succeeded in starting several large enter- 
prises for which they have charged an excessive promotion cost. 

Not only have these promoters persuaded farmers to start 
packing plants, but they have induced the launching of a num- 
ber of commercial projects whose hopes of success are dubious 
indeed. 

Misuse of Term "Cooperation" 

Before going further I would call your attention to the fact 
that this talk is directed against the promotion of dangerous 
and doubtful commercial enterprises and the misuse of the term 
cooperation, and nothing that I say should be interpreted to 
mean that farmers can not carry on enterprises of a large busi- 
ness character in a cooperative way. Enemies of cooperation 
have pointed to the packing house situation and claimed that 
cooperation and cooperative principles will not work, so far as 
farmers are concerned, in big business operations. To contra- 



288 MARKETING AND FARM CREDITS 

diet such statements it is only necessary to point to the opera- 
tion of the California Fruit- Growers ' Exchange which repre- 
sents a combined capital of nearly $130,000,000. This organi- 
zation, formed on cooperative lines and controlled by cooper- 
ators, annually markets 30,000 or more carloads of lemons and 
oranges, and maintains a distributing and sales system that 
blankets the world. But since there is " a time for everything, ' ' 
farmers should beware of undertaking enterprises for which 
they are not peculiarly fitted and against handicaps which may 
be overwhelming. 

. No one is a stronger believer in agricultural cooperation than 
I, and a large part of my activities are devoted solely to 
the work of spreading the knowledge of and the application of 
cooperative principles to farm business. With this explanation 
we may now take up the Farmers' Cooperative Packing Com- 
pany Movement, and from its present status, arrive at some 
conclusions with regard to the opportunities afforded farmers 
in this line of business. 

First Plant Started at La Crosse 

The first cooperative packing project undertaken in this 
country by farmers was at La Crosse, "Wisconsin. I wish that 
I could tell you that it was built by the farmers when it was 
started but, unfortunately, it was not. If there are any stock- 
holders of this plant present (and there are some Iowa stock- 
holders) it will be of interest for you to know that from start 
to finish no more dubious deal was ever put over American 
farmers than this one at La Crosse. The Farmers' Cooperative 
Packing Company of La Crosse closed its doors in December 
because Manager D. H. Baker was not willing to keep the plant 
going when he knew that it would not pay its way. With its 
shutting down the community has awakened to realize that the 
plant itself is practically worthless save for some machinery 
and the river frontage along the railroad tracks. Of the $265,- 
000 subscribed about three years ago there is practically noth- 
ing left except a dilapidated building and the machinery, much 
of which is practically worthless — and the prospects of disso- 
lution. How then did the farmers lose their money and why? 



CHARLES W. HOLMAN 289 

I am going to call things by their right names and am going 
to name the persons who are deemed responsible for this loss 
of money and the defamation of the fair name of cooperation 
in La Crosse. 

In the beginning this packing plant was owned and operated 
by the Langdon-Boyd Packing Company. The plant, as it was 
sold to the farmers, was some 14 years old. Some of the ma- 
chinery in the building wa-s over 30 years old. At the time the 
transfer was made the walls were falling down, the floors were 
falling in, the timbers were rotting and very little of the ma- 
chinery was usable at all. But this condition, of course, was 
carefully hidden from the farmer stockholders who purchased 
the plant. 

It is said that the National Bank of La Crosse carried a debt 
of $55,000 or thereabouts against the Langdon-Boyd Company. 
So, of course, the bank must have known the true condition of 
affairs. Yet officers and directors of this bank encouraged the 
farmers to take over the plant at a price which was beyond 
all reason. In addition, preferred stockholders possessed about 
$37,000 of Langdon-Boyd stock and it was necessary to reim- 
burse them in case any disposition was made of the plant. 

Andrew Boyd, president and general manager of the Lang- 
don-Boyd Company, was responsible for the operation of the 
plant at this time. It may be conceived that Boyd became a 
little desperate. He could barely meet his payrolls. He could 
not provide for necessary improvements. Interest payments at 
the bank he found hard to meet and demands of his stockholders 
for dividends weighed upon him. So in his desperation he fell 
upon a plan to relieve himself of responsibility by unloading 
upon other persons, or, in plain language, "passing the buck." 
He conceived the idea of floating a new company — this time a 
cooperative corporation under the laws of Wisconsin. He cast 
about to find the necessary purchasers and learned of a move- 
ment among the members of the Wisconsin Society of Equity 
for the launching of their own packing house enterprise. This 
happened in 1913. At that time the Equity was composed of 
about 12,000 farmers of fighting blood and spirit. This so- 
ciety had constituted a packing house inquiry committee which 
had recommended the general idea of farmers doing their own 



290 MARKETING AND FARM CREDITS 

packing for themselves. Among the prime movers in this pack- 
ing house idea was Ira M. J. Chryst, at that time president of 
both the state Equity and the national Equity. Boyd learned 
that Chryst was the man to see and opened negotiations with 
him and others. After some correspondence Andy Boyd made 
a proposition to the Equity Society offering to sell his plant 
for $122,914.36. This, he claimed, was less than the true value 
of the plant. The committee appointed to investigate the mat- 
ter did not do its work thoroughly. There is nothing in the rec- 
ords of this committee to show that they ever sought for a com- 
petent packing house expert to look over the plant and advise 
them as to whether they should recommend to the Equity its 
purchase at Boyd's price, yet this committee reported an en- 
dorsement of the Boyd deal at Boyd's own price. 

"Putting- One Over" the Delegates 

In 1913 a meeting of the Wisconsin Equity Society was held 
at La Crosse in December. At this meeting promoters Andy 
Boyd and Ira M. J. Chryst were instrumental in w^orking the 
delegates up to a hectic enthusiasm with regard to this particu-. 
lar deal. I have no doubt that the cards were stacked and the 
whole proposition railroaded through at the 1913 meeting. But 
warning voices were in their midst. One or two men like my 
friends Charles A. Lyman of Ehinelander, Wisconsin, and Dr. 
Charles McCarthy of the Wisconsin Legislative Keference Li- 
brary denounced the deal on the floor of the convention. Yet 
the delegates unanimously endorsed the proposition and left the 
road open for the floating of a farmer company to carry out 
the deal. 

Andy Boyd now went to Chicago and secured the services 
of one F. A. S. Price, a professional promoter, whose station- 
ery called him "A Financial and Fiscal Agent." Boyd made 
a contract with Price to give him 15 per cent commission for 
selling stock in the new company. It was agreed that this stock 
should be sold as follows: 

$100 per share for the first $100,000 sold 
105 per share for the next 50,000 sold; 
110 per share for the next 50,000 sold: 
115 per share for the last 50,000 sold. 



CHARLES W. HOLMAN 291 

This meant that while the company was incorporated for $250,- 
000 the stock when sold would bring in $265,000. Now in 
this contract Boyd agreed not to interfere in any way with'Pro- 
moter Price's methods of selling stock to farmers. So when 
the board of directors of the farmers' company came to take 
over the contract which Boyd had made with Price they later 
discovered that they had no power to go to Price and say ' ' One 
of your men is making misrepresentations in the sale of this 
stock and we demand that you change your tactics." 

Boyd now proceeded to have the new company incorporated 
under the laws of Wisconsin. The constitution and bylaws 
were fairly good ones and the company was named The Farmers' 
Cooperative Packing Company of La Crosse. 

Stock Salesmen Put on Board of Directors 

When the time came for the election of officers, the persons 
whom Boyd and Chryst and Price wanted were put on the 
board of directors and Boyd and Chryst and Price were also 
on the board of directors with Boyd installed as vice-president 
and Chryst as president of the concern. Think of putting stock 
promoters on the board of directors of a farmers' organiza- 
tion ! Two other persons who were undoubtedly dupes worked 
in very closely with this group. They did not know always 
what they were doing; but they helped constitute the machine 
which from now on worked smoothly in bringing about the un- 
loading of the Langdon-Boyd property. 

With the moral backing of the Equity Society everything was 
ready for the sale of stock. Additional impetus was given by 
the fact that officers and directors of the National Bank of La 
Crosse headed the subscription list. When the farmers heard 
of this they purchased the stock without further question and 
they accepted the wild stories wiiich in many cases were told 
them by the stock salesmen. But after the stock sale was well 
on, most of these bank directors and officers turned their stock 
over to the salesmen and succeeded in unloading. In the mean- 
time as fast as the money came in Promoter Price got his share 
and the National Bank of La Crosse took up its notes and the 
preferred stockholders of the Langdon-Boyd Company were 
paid off. 



292 MARKETING AND FARM CREDITS 

Hushing Up the Valuation Question 

In the early stages of the promotion, the farmers had ac- 
cepted the whole proposition without question. But ugly 
rumors as to the true value of the plant liad begun to float 
around and at one of the meetings of the board the question 
was raised as to what the plant was really worth. Boyd then 
produced a person by the name of R. A. Hall of Grand Rapids, 
Iowa. Hall claimed to be an efficiency expert. He was em- 
ployed to value the plant. The report which he turned in was 
one of the neatest bits of typewriting I have even seen in my 
life, and his figures placed the value of the plant up to $140,- 
345.62 ! Two real estate men of La Crosse and a mechanical en- 
gineer or two also corroborated Mr. Boyd's original valuation. 
In this way the farmers were silenced, the deal was officially 
approved and everything went through. And in this way 
something like $100,000 of the farmers' money was lost through 
f iiise valuation. In contemplating this transaction, I am tempted 
to ask: Where are the Wallingfords of yesterday? 

The board then proceeded to elect Andy Boyd as manager of 
the new plant. Boyd selected a man named C. E. DeMoss as 
superintendent, and the two of them undertook to carry on the 
business for the farmers which Boyd was not able to make pay 
under his own ownership. 

What Poor Management Can Do 

Now, where did the money go? 

Of the $265,000. which was raised through the sale of stock 
$122,914.39 was paid to the Langdon-Boyd Company. Pro- 
moter Price received $37,814.52. It was also found necessary 
the first year to spend $11,314.20 in additions and improve- 
ments in order to make the plant work at all. 

Within ten months after the plant was started Boyd and De- 
Moss had permitted over 277,300 pounds of meat to spoil in 
the cooling room. In one lot alone there was $40,000 worth of 
meat. I do not see how any man attending to his business at a 
packing plant should not have been aware that his temperatures 
were wrong and that the money of the farmers was getting 
away. From this cause and from other irregularities in man- 



CHARLES W. HOLMAN 293 

agement and mistakes in purchases of livestock and in resales 
of livestock at times when the plant could not handle the sup- 
ply, the Boyd management had lost, by the end of the year 
1915, $71,602.34 in operating expenses. In this way $243,645.46 
of the farmers' money vanished. Now, if collections on stock- 
holders' notes had been good, the plant would have had a little 
more than $21,000 working capital ; but collections did not come 
in as fast as the management might hope and the company was 
forced to operate on practically no working capital of its own 
and upon a maximum loan of $15,000, which it could secure 
from the National Bank of La Crosse. In 1916 the plant was 
forced to spend $11,154.17 in improvements and, despite the 
careful management of Manager D. H. Baker, who was placed 
in charge, the plant lost $3,263.52 on the operating period of 
November 1, 1915, to December 31, 1916. In this way do we 
account for $258,063.15 of the farmers' money. It may be well 
to draw the curtain at this particular point. 

Cutting- Down the Wastes 

I would not leave the story of La Crosse without paying a 
tribute to the careful and conservative management under Mr. 
D. H. Baker. Mr. Baker was a stockholder in the plant and 
had had several years' experience as a packing house worker 
and, while handicapped for lack of finances, he did some valiant 
work in collecting notes which were due and in cutting down 
expenses and in trying to put the plant on a paying basis. 

With the advent of the Baker management a number of ir- 
regularities were checked up in connection with the Boyd- 
DeMoss regime. One of these occurred in connection with the 
spoiling of the meat, when Mr. Boyd managed to get three car- 
loads of the rotten stuff out of La Crosse and down to Chicago. 
DeMoss went down to see what could be done about selling it. 
He wired back that he must have "$1,000 quick." Telephone 
conversation developed the fact, according to Baker, that De- 
Moss wanted this $1,000 to "grease the track." The cars 
eventually sold, I am told, to Morris & Company and brought 
$2,600. If there is a Morris man here he might investigate as 
to why it was necessary to "grease the track." 

Manager Baker found himself "up against" a hard job. It 



294 MARKETING AND FARM CREDITS 

was necessary to purchase livestock on a rising market and he 
had no stocks on hand from the 1915 low prices. So he worried 
along nntil the first week in December when he closed the doors 
of the plant and notified the directors. 

A State of Suspended Animation 

In all 2,140 persons purchased stock in this concern. Sales- 
men went far afield to find their victims. Persons in Iowa, 
Minnesota and distant parts of Wisconsin subscribed. This 
scattering of stock .ownership brought about a very difficult 
problem when it became necessary to take some final action for 
disposing of the plant. The board of directors canvassed the 
situation and determined to call a special meeting and put the 
problem of reincorporation and the building of an entire new 
plant up to the shareholders ; but they were never able to secure 
a quorum as 51 per cent of the shareholders are required to be 
present or to vote by mail on a proposition under the Wiscon- 
sin cooperative law, which is "a one-man one-vote law." Nor 
were the board able to secure a quorum necessary for legal 
transaction of business at the annual meeting held this month. 
And there the matter rests. But the National Agricultural Or- 
ganization Society in order to help this situation has been in- 
strumental in the introduction into the Wisconsin legislature 
of an amendment to the cooperative law so that less than the 
majority now recjuired may constitute a c[uorum where stock- 
holders number a thousand or more in cooperative associations. 
In the meantime the annual meeting has been carried over to 
March 7th when, if this law is passed by that time, the stock- 
holders will either vote to wind up the affairs of the company 
or they will undertake the building of an entirely new plant. 
The present plant is so dilapidated and out of condition and 
unsanitary and unsafe that it is doubtful if the federal govern- 
ment will permit it to be opened again. 

In the meantime the La Crosse district farmers are angry and 
disappointed. Some of them are trying to find out whether they 
have grounds for action for civil recovery. Others are talking 
about a grand jury investigation with the idea of putting some- 
body behind the bars. Mr. Boyd still holds some notes, one of 



CHARLES W. HOLM AN 295 

which is for $5,000 which he made for the company in the Na- 
tional Bank of La Crosse while manager and later took up. 
Mr. Boyd himself is said to be in Montana or some other west- 
ern state. 

Model Plant at Wausau 

But this particular plant could not be made the basis of any 
just estimate as to whether farmers' cooperative enterprises can 
succeed in the packing house business. There are other plants 
in operation and under construction whose fate will determine 
the future of cooperative enterprises of this character. The 
plant at Wausau, w^hich I visited, is a model plant so far as 
one inexperienced can tell. It was capitalized originally for 
$250,000; but the farmers of Wausau built this plant from the 
ground up. In the early stages of their operations Mr. Price 
attempted to put in his hand but he was kicked out. However, 
he is still operating in Wisconsin and Illinois, too. 

In Wausau they managed to start with a board of directors 
who were unusually competent men. The first president of 
their company was a justice of the Wisconsin supreme court. 
This board carefully searched the field and found a man whom 
I believe to be a competent packing house manager. They em- 
ployed him during the early stages of construction and they 
also consulted with the authorities of the United States Depart- 
ment of Agriculture in Washington. It is said to be an ideal 
small plant. They have some 18 acres of ground along 
the railroad track. The building itself is four stories high and 
the equipment is capable of handling 50 hogs an hour. 

Experienced Manager in Charge 

Mr. L. C. Hoopman, their manager, was for 22 years in the 
packing house business. He has worked for the large packers, 
but for several years before he took his present employment 
he was employed by the federal government as an inspector. 
He went to the Wausau plant recommended as a man of high 
honorable instincts. The board also secured, and this is very 
important, a competent auditor, Mr. C. H. May. I think it im- 
portant to mention here that Mr. Hoopman, in the days when 



296 MARKETING AND FARM CREDITS 

the plant was being promoted, warned the farmers that they 
need not expect any profit dividends under the first three years 
if they got any then. He understood the business difficulties of 
starting against competitors who have been able to make the 
government of England come to its knees. The plant is 
built on the corner of the 18-acre tract which is divided into 
feed lots and holding pens. Here are kept "piggy sows" and in 
the summer time feeders. 

In organizing this company a fixed commission was paid to 

Mr, G-. H. Horrell. The stock was sold as follows: 

$100 per share for the first $100,000 

106 per share for the next 50,000 

112 per share for the next 50,000 

118 per share for the third 50,000 

which brought into the company a premium of $18,000 above 

capitalization. The statement of the company of September 22, 

1916, shows an organization charge for selling the stock at 

$28,930.10 in addition to the premium, which means that $45,- 

930.10 was actually spent in organizing this company. They 

also spent $11,718.18 for real estate and improvements, $116,- 

926.97 on buildings, $29,601.07 on machinery and equipment 

and $1,370.33 in the digging of a well. This left only $62,453.35 

for working capital ; and the statement of the board called for 

$140,000 in working capital. Accordingly the stockholders 

voted to sell an additional 1,000 shares of the company's stock 

at $118 per share, and this sale is still in progress. 

In all 2,017 stockholders had purchased during the year 
which has just closed. These are mainly within a range of 75 
miles of Wausau. The volume of business during last year was 
$850,000. The plant handled 4,539 cattle, 15,671 hogs, 5,868 
calves and 750 sheep. These figures were given me by Auditor 
C. H. May.* 

No Dividend the First Year 

Manager Hoopman told me that on the first of last Novem- 
l)er the plant showed a net profit of $1,800. Since then he said 



* The figures are at variance in some respects with the statement of 
the first year's business filed with the secretary of state after this ad- 
dress was delivered. — Ed. 



CHARLES W. HOLMAN 297 

there has been quite a fall in prices of some of the meats which 
-are in stock and they will not be able to make an annual state- 
ment showing a dividend. In fact they will show a paper loss, 
although they are holding their stocks with the idea that some 
change in the market prices w^ill bring them up in value and 
show a profit for the year's operations. At Wausau they claim 
to grade stock closer than at the Chicago yards. They say that 
they do not bunch the cheaper grades with the better, thus low- 
ering the value of the lots. They aim to pay the farmer from 
10 to 15 per cent per cwt. more than Chicago prices will net 
him. 

The argument usually made in favor of a plant like this one 
at Wausau is that if the majority of the stock is held by farmers, 
and if the plant itself is able to make expenses, the farmers 
will secure enough money at higher prices for their livestock 
to warrant their continuing as stockholders. At Wausau peo- 
ple claim that the average prices they have paid for this live- 
stock lias been from 10 to 15 cents higher than the Chicago 
prices, and that this is on account of the difference in freight 
rates and the saving of the country buyers ' commission. I did 
not have an opportunity to check on these statements, although 
1 talked with one or two farmers who maintained that Holding 
a share or two of this stock they felt to be a wise investment as 
they had, during the year, secured a slight advantage in price 
for their beasts at the Wausau plant. 

Regularizing Supply of Livestock 

One of the big problems at a plant like the Wausau plant is 
to keep the supply of livestock regularized. It is necessary 
for this plant to run at maximum capacity in order . to mini- 
mize the overhead charges; and in order to aid in regularizing 
the supply the Wausau management has organized a coopera- 
tive livestock shipping association. The company maintains the 
control over association managers and pays them six cents on 
the hundred for handling all the shipments. It maintains a 
very careful audit system with regard to these shipments as 
they come in. It furnishes statements in duplicate to the as- 
sociation manager and to the farmers shipping the stock. Each 
association has a regular day for shipping and each farmer 



298 MARKETING AND FARM CREDITS 

has a regular number which is furnished on metal tags 
with which he rings the ears of his animals. The weights, 
are very carefully checked at both shipping and recei\dng 
points, after which a carefully audited cost-tinding system is 
maintained on each lot that is purchased up to the time that it 
is sold. 

Careful Auditing an Essential 

The secret of whatever success the Wausau plant may have 
had is undoubtedly due to its careful auditing system and the 
very careful control which the manager has of the plant. He 
has had to train a number of his men, which is perhaps an ad- 
vantage, but during the year of its operation this plant has only 
run one day at full capacity. It is located in a section of the 
country that is not strictly a livestock section and it must de- 
pend upon future development for a supply from nearby points. 
Up to the present it has purchased from as far away as South 
St. Paul and from Green Bay, although the average territory 
from which it draws is about 75 miles in radius. 

Handling Sales System 

It is perhaps fortunate that Wausau and other plants have 
arranged to handle hogs as the major part of the activities; for 
the problem of handling hog meat is simpler than that of beef, 
and sale problems are not so difficult. The AVausau plant 
makes a great specialty of sausage. It has sold as high as 
59,000 pounds in a month. It manufactures over 30 varieties. 
It maintains a city sales system, a department that handles 
small 100 pound express shipments and a sales staff for larger 
quantities. It has shipped as far as Winnipeg, Canada and 
Dallas, Texas, butj the greater quantity of its shipments is to 
Wisconsin points. Up to the present time this plant has not 
undertaken to undersell any of the larger packers. In fact to 
do so would be suicidal. They do say that Swift is selling un- 
der them at all points but that the other packers are not. 

I should say that if any packing plant under cooperative 
management could succeed this one at Wausau will. But like all 
new ventures it still remains to be seen what will develop there 



CHARLES W. HOLMAN 299 

Where Other Plants Are Starting 

Now as to other cooperative packing plant activities. At 
New Richmond they began building on a $250,000 capitaliza- 
tion but after investigating the Wausau plant raised their 
capital stock to $350,000. At Madison the farmers incorporated 
for $500,000 and later raised to $750,000. Both at New Rich- 
mond and Madison the plants will be operating in time to 
catch the next crop of hogs. A plant of larger size than at 
New Richmond has opened at Faribault, Minnesota. At St, 
Paul sale is on for a plant of $500,000 or perhaps it is $1,000,- 
000, I am not sure. Last week a great farmers' organization 
met at Fargo, North Dakota, composed largely of Equity mem- 
bers and endorsed a stock sale to commence on a $1,000,000 
plant. Another cooperative packing company has just opened 
at Rockford, Illinois. They bought an old plant there, and 
the same man whoi officiated as first president of La Crosse, 
namely Ira M. J. Chryst, is also president of the Rockford plant 
and the St. Paul organization. Chryst was also president at 
one time of what was known as the Equity Securities Company, 
a promotion organization to sell stock in enterprises for which 
Chryst and others secured the moral endorsement of the Equity. 

High Promotion Costs the Rule 

I am told that promotion costs on the Faribault plant were 
11 per cent, but the Madison, Wausau, New Richmond, Rock- 
ford and La Crosse projects surely did not come under 15 per 
cent for the promoters. In "Wisconsin alone it is estimated 
that over $250,000 will have been spent for promoters' fees 
on the four plants which have been started. 

Word has come to me that farmers in the South are going 
mad over the idea of starting farmers' cooperative packing 
plants and I have had correspondence from Missouri parties 
who tell of great interest in that state in the idea. I under- 
stand also that the question may come up in Iowa. 

A Plan for Coordinate Action 

Now as to the conditions these packing plants must face. 
Clearly the starting of any more plants within close touch of 
each other in Wisconsin would be a further division of territory 



300 MARKETING AND FARM CREDITS 

and would harm the existing plants. Also these plants may be 
used by buying butchers and retailers for competitive pur- 
poses unless they have some means of keeping in touch with 
each other. Consequently the National Agricultural Organi- 
zation Society has suggested to each of the farmers' cooperative 
packing companies in Wisconsin that, since the big packers can 
care for byproducts most efficiently and have advertising facili- 
ties and railroad facilities and accommodations and credit and 
strength and influence, the cooperative packing plants should 
do something to offset these difficulties. We have suggested that 
they get together in the near future and form a federation. 
We have suggested that they take some steps toward working 
out a common state brand and a common form of advertising 
and that they also arrange to purchase collectively all materials 
used in factories and to employ collectively legal help and help of 
a scientific and expert nature, and that they should have an 
additional department for the instruction of the farmers in 
order to build and keep a direct interest on the part of the 
suppliers in the cooperative plants. 

Halt March of the ' ' Wallingf ords ' ' 

Looking at this matter as one who would like to see all forms 
of cooperative effort among farmers succeed, I would say that 
the question is still an open one whether such plants can suc- 
ceed. And while I feel that we should do everything we can 
to help those plants succeed which have started, that there 
is now time to wait awhile, three, four, five or six years, if 
necessary, until we can see what these plants can do before 
any of us put any further money into new farmers' cooperative 
packing house ventures. 

It is still an open question whether the small packer can or- 
ganize his help under the efficiency basis. It is still an open 
question whether he can get a sufficient supply of livestock at 
regular periods. It is still a very doubtful question whether 
even if they have an efficient management that the big packers 
will let so many of these cooperative concerns sell to the regu- 
lar trade. So it is well to be very careful and wait. There is 
plenty of time and you now have an excellent opportunity of 



W. J. RUTHERFORD 301 

observing whether a cooperative packing concern can succeed 
without yourselves stepping blindly into the snares spread by 
the J. Eufus Wallingfords. 



LIVESTOCK MARKETING IN CANADA 

"W. J. Rutherford * 

The Province of Saskatchewan most of you are familiar with 
no doubt, is an inland province in Western Canada that is 
known all over the continent, I suppose, as a wheat producing 
province. Last year we marketed 150,000,000 bushels of wheat. 
This year it is cut down somewhat, and it is about 100,000,000 
or over of wheat that we send to the world's markets, not man- 
ufactured. 

The province is also an important one in the production of 
livestock in Canada. The livestock producers have thought 
for years that they were not getting a fair deal in regard to 
the marketing of their products. The same complaint we have 
heard here today that when they would produce heavily of 
hogs, which they could do within a short period, the price would 
be depressed, and then they would cut out the hogs. So it 
has been pulled down considerably so far as hog production 
is concerned. 

"What prevails in regard to hogs prevails somewhat in regard 
to cattle. 

The situation is this : Those who are interested in the future 
welfare of that province know that wheat production will 
rob it of its fertility, and they are endeavoring to encourage 
livestock Avork. The government recognized this, and last 
year it appointed a livestock commission to investigate the 
question of livestock production and livestock marketing. 
That commission has not yet rendered a report, and I am not 
in a position to say what that report will be. 

The province has what might be termed the cooperative idea. 
There are between 30,000 and 40,000 farmers, out of the num- 

* W. J. Rutherford is dean of the college of agriculture in the Uni- 
versity at Saskatoon, Canada. This talk was a part of the discussion 
in the hearings on the marketing of livestock. 



302 " MARKETING AND FARM CREDITS 

ber of 100,000 who have linked themselves together in what 
are known as the grain growers' association; 18,000 to 20,000 
of those men are joined in what is known as the Cooperative 
Elevator Company, and this year at their annual meeting they 
declared a surplus of earnings of over $500,000 and they had 
marketed of this fall's crops over 40,000,000 bushels of wheat. 
Now, I need not say, or even indicate, what I think that com- 
mission that has been appointed will render as its report; but 
I would conjecture that it will be along a cooperative line as 
has been pointed out by numerous speakers today, of one in- 
terest and another. It has already pointed to cooperation 
among the meat producers, and they will carry it further in 
Saskatchewan, I imagine, and carry it on to the consumers, for 
every one living in that province is there because of this agri- 
cultural possibility. 

Mr. Tomlinson (of Denver) : I would like to ask you one 
question. You are from Saskatchewan? 

Dean Rutherford: Yes, sir. 

jMr. Tomlinson : You will recall the signing of the Canadian 
Reciprocity Treaty, whereby Alaska came in free from Canada 
to the United States. Did not that have a marked effect on 
prices of livestock in Canada? 

Dean Rutherford: Yes. 

Mr. Tomlinson: Did it not increase the price of hogs from 
$1 to $1.25 a hundred? 

Dean Rutherford: I could not say as to the figures, but it 
stimulated production. 

Mr. Tomlinson: But in other words, the increased compe- 
tition from the American packers enabled the Canadian grow- 
ers to secure better prices for their livestock? 

Dean Rutherford : Yes, both cattle and hogs. I might add 
just now that a movement was set on foot in Saskatchewan in 
the latter part of September. It was cooperative in this re- 
spect, that the provincial government placed a livestock ex- 
pert at the yards in Winnipeg, where the Saskatchewan feed- 
ers were assembled, and they let the livestock growers know 
that their expert would act for them. The Dominion govern- 
ment offered assistance ; the packers offered assistance : the 
railways at once offered a reduced freight rate on feeders and 



W. J. RUTHERFORD 303 

on females that would be returned to Saskatchewan. Remem- 
ber now, these feeders and heifers had originated in Northern 
Saskatchewan, in what we term the park country, where grass 
is abundant, and good water, shelter, and everything else pre- 
vails. As a result of the combined efforts of the livestock 
l3ranch of the department of agriculture of the province, the 
Dominion government, the daily press, the banks and the 
railroads, in the one month of October between 6,000 and 7,000 
of those were returned to the province, as against 800 in the 
same month the year before, — being mostly females that were 
coming down to the States before. 

Mr. Tomlinson : Let me ask one more question just at this 
time. Would not the livestock growers in Saskatchewan like 
to have the Canadian Reciprocity Treaty amended so that live- 
stock in the United States could come into Saskatchewan -with- 
out paying the Canadian duty? 

Dean Rutherford: Do you mean the feeders? 

Mr. Tomlinson: Yes. 

Dean Rutherford : Well, I have not heard them express an 
opinion on that, but for a long time the feeders have been com- 
ing up. Just recently two trainloads originated just a few 
miles from where I live ,and were shipped to the Chicago mar- 
kets, — feeders, which had gone up from the States to South- 
west Saskatchewan. 

Mr. Tomlinson: And paid the duty? 

Dean Rutherford: I expect so. 

Mr. Tomlinson: And then had it refunded? 

Dean Rutherford: I beg your pardon? 

Mr. Tomlinson: I say, and then had the duty refunded 
when they came back? 

Dean Rutherford : No. These feeders had originated in 
the Panhandle of Texas, as I understand it, on what used to be 
known as the Matador range. 

Mr. Booker (of Virginia) : I would like to ask one of the 
gentlemen who has spoken to us today to outline the principal 
points on which the Federal Trades Commission will be asked 
to make an investigation, in connection with cattle, etc., — 
those specific points. 

Chairman Boyle : Can any one answer that question for the 
gentleman ? 



304 MARKETING AND FARM CREDITS 

Mr. Tomlinson (of Denver) : State the question again. 

Chairman Boyle : The question is, what particular points, 
along what particular lines, will the Federal Trade Commis- 
sion be supposed to investigate the livestock question ? 

Mr. Tomlinson : Well, in the absence of anybody else to an- 
swer that question, I will say I think it has been very plainly 
shown today that we want a very careful investigation of the 
meat industry and the livestock industry, and meat products, 
in the way of consumption and production, — the whole thing. 

Mr. DeRicqles (of Denver) : In connection with that in- 
vestigation, I think, if the audience is interested in it, we can 
say that one of the main things that we want to bring out is 
the increase in the cost of production. There is a concentra- 
tion of these defined processes of livestock at a few places, 
which gives an opportunity to control the price. That is a 
very big question, the increased cost of production, and the 
concentration of receipts at a few places in a few days. It is 
a very big question, and it is unfair to try to cover in just a 
few words what the Federal Trade Commission would be 
asked to go over ; there has been so much said about the great 
fortunes that have been made by the producers, that they are 
put in a false light to the consumer ; the consumer thinks by 
cutting off meat from his bill of fare that he is hurting the 
producer, while in fact he is hurting the whole country. 

Mr. Smith (of Indiana) : I am very much interested in the 
subject of classification of stock. I presume that question would 
come before the Federal Trade Commission. The gentleman who 
led the discussion on that just a little while ago said it was 
impossible to lay down a rule for the classification of stock. 
The fact is that they are classified, and that the farmer has 
nothing to do ^^'ith the clssification. To illustrate : I shipped a 
carload of cattle to the Indianapolis market, and I thought, and 
my neighbors thought that they were all of a certain class; but 
when the commission man put them up for sale the buyer classi- 
fied them according to his own notion of the matter, and I had 
nothing to do with it. I had no say-so in the matter at all. 
Now, then, I shipped just a few days after that a carload of 
hogs, and they were what I thought to be first-class hogs; but 



W. J. RUTHERFORD 305 

when the commission man sold them to the packer, or to the 
agent of packer, he crowded them into pens, and he would 
punch out this one, and punch out another one over here, and 
so he put them into about three grades. Some I got $11.20 for, 
and some I got $7.25 for; and I had nothing to do in the matter 
at all. Now, I consider such a procedure as that unfair, and 
if the Federal Trade Commission, or the resolutions committee 
of this Conference is going to pass on that phase of the subject, 
I would like for them to have that part in, too. Let the govern- 
ment or state or somebody stand between the farmer and the 
packer, or the buyer for the packer, and classify stock according 
to its merits. I believe that is all I have to say, except to say 
that this is quite important to the man who raises hogs and 
cattle. 



MARKETING OF GRAIN AND CHEESE. 



MARKETING PROBLEMS OF NORTHWESTERN 
GRAIN GROWERS 

Lynn J. Frazier * 

The marketing problems of the grain growers are very much 
the same as marketing problems of the livestock men or pro- 
ducers of any line of produce. 

The farmers of the Northwest have been preached to for 
years and years by newspaper men and college professors and 
doctors and lawyers and merchants and politicians and railroad 
magnates, and better-farms experts and all that kind of men. 
They have been telling us that we should do better farming; 
that we should raise bigger crops. And the farmers have been 
very responsive to that instruction; they have worked 16 hours 
a day and they have tried every fool experimental problem that 
they have ever heard of, trying to produce bigger crops, and 
have produced those bigger crops. We have often found that 
we do not get a sufficiently larger increase in the returns for 
those crops to pay us for the extra trouble and the extra ex- 
pense in handling those bigger crops, and so we become dissat- 
isfied to an extent. And when some smooth talking individual 
comes out from town and tells us about the "cooperating" 
scheme, and how cooperation would better the interests of the 
farmers and wants us to organize a farmers' elevator or cream- 
ery or farmers' store, or something of that kind, why we are 
willing to be taken in. In the majority of cases we find that 
after that organizer has cleared out we have paid him mighty 
well for taking us in; for in a lot of instances our farmers' or- 
ganizations have not been successful. 

We admit it, and there are various reasons why. Sometimes 
it was the farmers' own fault; they would not stick together. 
Other times we did not have cows enough in the neighborhood to 



* Ljmn J. Prazier of Hoople, N. D., was the candidate of the famous 
Farmers' Non-Partisan League of North Dakota and was elected gov- 
ernor in 1916 by a tremendous majority. 



310 MARKETING AND FARM CREDITS 

support a creamery, or we did not — could not get a manager 
who was honest or competent. And sometimes they were both 
dishonest and incompetent. 

Good Work Among Grain Growers 

Our farmers' elevators for instance; sometimes, where the 
farmers pull together and we get a good manager, we have made 
a good success of them and they have been a great help to the 
farmers; at times they have been an example for all. There 
was a case up there in North Dakota a short time ago where a 
farmers' elevator agent got to speculating and got in bad and 
skipped out. Then a suit was brought by the chamber of com- 
merce firm at Minneapolis to recover the debt that they claimed 
the farmers' elevator owed them, against the directors there, 
you know, and they did recover most of it. 

But in that law suit was brought out the fact that the elevator 
manager up there had speculated — ^bought options — and the 
price had gone the wrong way and to cover that loss he shipped 
the chamber of commerce firm a carload of wheat. They held 
the carload of wheat to cover the loss until the second car came 
in, and then sent the proceeds of the first car, and held the sec- 
ond car to cover the loss until the third car came in, and then 
sent liim the proceeds back. And still, in that law suit, the 
chamber of commerce firm tried to make out that they did not 
know that that farmers' elevator agent up there was speculat- 
ing! Of course they knew he was speculating and they kept 
him right on speculating and as long as he was speculating with 
them they had him under their thumb. He had to ship to them 
to cover up the deal, and they knew it, and he knew it, and got 
in wrong and finally skipped out. That is only one instance. 
There are a number of them in North Dakota similar to that. 

The better farming movement is all right; we are interested 
in better farming ; we want to raise bigger crops ; we want to 
diversify. We have been told to classify and diversify. Some 
of those men seem to think about nothing except to give the 
farmers instructions so as to keep their mind concentrated on 
that one proposition of producing bigger crops. Such persons 
do not wanf. them to think about the marketing end of it at 



LYNN J. FRAZIER 311 

all. They want us to let that take care of itself or let the spec- 
ulators take care of the marketing end of it for us. 

Better Markets Mean Bigger Crops 

But we have come to the conclusion in the Northwest that we 
must take some consideration of the marketing end, and that 
it is not so much of importance for us to produce big crops as 
it is to get better prices for what we do produce. We must get 
prices that will pay us a profitable income, we have discovered 
after a good deal of hard work and experience, and they are 
both mighty good teachers. 

We have found out that we were not progressing as we had 
hoped to. We have found that the number of farm mortgages 
throughout the country are increasing. We have found that 
the interest has likewise increased, and we have found that 
more and more of the farm lands are getting into the hands of 
agents or, I mean, into the hands of speculators, thus making 
room for more tenants. So we have concluded that the only 
thing to do is to have something to say about the making of the 
laws in those agricultural states. 

We believe that the only way that we can remedy and better 
our farm conditions and solve this marketing problem is by 
having something to say about the laws; because the law really 
regulates all of these things. In a lot of instances we have 
found year after year that we were doing well if we paid the in- 
terest on the mortgage, and that was about all that we expected 
to do. Do you know that there are thousands of farmers through- 
out the Northwest who, if they sold out today for the price they 
paid for their land when they started in farming and cleaned up 
their debts, they would not have money enough left to move to 
the poor house? Thousands of them are scattered through this 
Northwest, and the money that they would have left represents 
their profits on their farming operations. 

Farm and City Business Different 

The farmers' mode of marketing his products' and doing his 
business is entirely different from that of our brothers who do 
business in town, I have often wondered how a man in any 
other line of business would get along, how he would succeed. 



312 MARKETING AND FARM CREDITS 

how long he would last, if he had to do business the way the far- 
mers do. Perhaps some of you "think the farmers are not business 
men. I want to tell you right here that the farmer under the 
present conditions of marketing who can make ends meet is a 
business man of the first order. The merchant in town buys 
his produce that he is going to sell at wholesale. He adds to 
that wholesale price the cost of selling, his insurance and in- 
terest, and so on, and adds a fair profit and then puts his price 
on and sells it at retail. But the farmer does just the opposite. 
He buys everything he buys at retail — at the other fellow's 
price ; and he sells everything he sells at wholesale — at the other 
fellow's price. And still they tell about the farmer being the 
most independent class on earth, and how healthful is farming, 
and what a nice recreation it is, and what good exercise it is to 
farm, and all that. Whenever I hear anyone talking along that 
line I always invite them out to the farm to follow me a 
few days just to see what a nice time we have. We certainly 
do have plenty of exercise; there is no getting around it. 

Experience in Marketing Potatoes 

In the part of North Dakota where I live we raise a good 
many potatoes, and this year it helped out wonderfully because 
our wheat crops are very poor. And we got a fairly good price 
for potatoes. Along the latter part of September when we were 
digging our potatoes we sold them for 80 cents a bushel. But 
at the same time, when we were getting 80 cents a bushel up 
there in North Dakota they were selling here in Chicago and 
Kansas City and other potato markets for $1.50 to $1.75 a 
bushel. Now, the difference between the price we sold them 
for up there, and the price they sold for down here was the 
handling charge. You know, the farmers do not do much in the 
handling of potatoes. All they do is plow the ground and get 
it in good condition. Then they plant the potatoes, and then 
cultivate the land to keep down the weeds and preserve the mois- 
ture. They have to spray the vines two or three times a year to 
Mil the bugs. When the potatoes are ready they dig them, pick 
them up in wire baskets, put them in sacks, load the sacks in 



LYNN J. FRAZIER 313 

the wagon and haul them to town and put them into a box car. 
Then the "handling" begins. 

All the farmer does is to raise the potatoes and the other fel- 
lows "handle them" and get the profit out of it. It is mighty 
good exercise, "handling potatoes." I hauled potatoes two 
weeks before I started out on the fall campaign. The day I left 
my home town I was in one of the stores and .the merchant said, 
^'Frazier, I have got a good joke on you." I asked him what 
it was. He said, ' ' There was a traveling man in here the other 
day and he asked if this wasn't the town that the candidate for 
governor lived in, and I said, ' Yes. ' And he said, ' I would like 
to see that fellow Frazier, I have never seen him.' " And the 
merchant told him, "If you want to see him very bad you can 
go over and see him at the railroad track; he is unloading po- 
tatoes in a box ear." So the fellow went over there to see the 
candidate for governor working mth potatoes; he thought it 
was quite a novelty. 

The men who are ' ' handling ' ' our products make more money 
on those products than the farmer does who is doing the 
actual work. We do not think it is fair or right or just, and it 
is not; there are some changes necessary. 

What Dr. Ladd Discovered 

A short time ago there was a bulletin issued from our agricul- 
tural college at Fargo by Dr. Ladd, president of the agricul- 
tural college (Bulletin 119). Now, at the agricultural 
college they have an experimental. mill on the campus, — one of 
the best in the United States, and, — by the way, the Depart- 
ment of Agriculture at Washington acknowledges Dr. Ladd to 
be the best authority upon the grades of grain in the United 
States. In this Bulletin Dr. Ladd gives the test of 96 samples 
of 1916 wheat. Ninety-six samples were tested and not only 
made into flour, but the flour was baked into bread, and the 
bread also tested. The difference, that is, the difference in the 
amount paid by the merchant or the men that handled the grain 
to the farmers, varied from 21 per cent on No. 1 northern 
wheat to 111 per cent on D feed wheat, that is. No. 4 feed wheat. 
One hundred and eleven per cent profit was made by grinding 



314 MARKETING AND FARM CREDITS 

that wheat into flour! The actual difference in the testing ac- 
cording to the amount of flour made only amounted to 11 cents,, 
but the difference that the grain men paid to the farmer at the 
time this testing was made was 68 cents ; or the spread between 
the northern wheat and T> feed wheat was 68 cents. The mar- 
gin was too wide, 68 cents too wide ; but later in the season that 
margin became as wide as $1.05. Of course, that little differ- 
ence of 68 cents to $1 does not make much difference to the 
farmers up there this year, because they have not much wheat 
to sell. But the farmer who reads that bulletin of Dr. Ladd 
cannot help but realize that he was not getting a square deal; 
and the consumer who pays the higher prices for flour this win- 
ter, who will read that bulletin, cannot help but feel that he is 
not getting a square deal; that he has been robbed by the 
grain combinations, by the milling combinations, because he has 
paid more for his flour than it was really worth according to 
the price paid for the wheat. In North Dakota we ship most 
all of our wheat to the Twin Cities, Minneapolis and St. Paul; 
and in ordinary years we raise the best wheat that is produced 
any place in the world. We ship it nearly all to Minneapolis 
and it is ground there by the Minneapolis mills and put in sacks 
and it is branded Minnesota flour. Minnesota thus gets the 
benefit and the profit on North Dakota's No. 1 hard wheat. 

Now, Minnesota is all right; but she is big enough to take 
care of herself, and we believe we should keep our farm prod- 
ucts in our own state and manufacture them as our finished, 
product and sell them as such. And we believe if we can do 
that we can get a better price for the producer and at the same 
time sell to the consumer cheaper than those products are sold 
now by eliminating a lot of middle men who get the cream of 
the profit. The farmers do not object to paying the high prices 
for the articles they buy based upon the wages of the men and 
women who manufacture those articles who work in the mills 
and the factories, but we do object to the excessive burden laid, 
upon the producer and consumer by those middlemen who han- 
dle the products. They add nothing to the value of what we sell,, 
or to the value of what we buy ; but they grow rich by handling 
our products. They grow rich by regulating the price we are: 



LYNN J. FRAZIER 315 

forced to take. They grow rich by regulating the price that 
we are compelled to buy at. 

Move for State-Owned Terminals 

Up in North Dakota we* thought that the terminal elevators 
in our own state or in Minnesota should be owned and controlled 
by the farmers of North Dakota so we could hold our grain 
and have something to say about it. So we Voted 
twice on the terminal elevator proposition, making an amend- 
ment to our state constitution that the state should have ter- 
minal elevators owned and controlled by the state. That prop- 
osition carried each time, the last time by 83 per cent; 83 per 
cent of the voters said by their ballot that they wanted state- 
owned terminal elevators. 

It was ''up to" the legislature that met two years ago to en- 
act that law establishing a state-owned terminal elevator, and 
yet when that last legislature m.et a majority of those men that 
we had sent to Bismark to represent us, to make our laws, saw 
fit, for some reason or other, to turn down the wishes of the 
83 per cent who voted for the terminal elevator and do the bid- 
ding of the other 17 per cent who voted against the terminal 
elevators. So we saw what the farmers were up against. Over 
400 representative farmers Avent to the state legislature to try 
and persuade this state legislature to "put that bill across" 
providing for the terminal elevator. Representatives of the 
different farmers' organizations in North Dakota, the farmers' 
elevators, the Equity, the Union, etc., and some of those state 
legislators who had been there for years actually told the 
farmers to go home and slop their hogs and they would take 
care of the laws for them. They said, "This is the first time in 
20 years that farmers have come down here and pretended to 
tell us what to do. ' ' 

Fanners' Non-Partisan League 

Well, we changed conditions so that it was the last time w& 
will ever have to tell them what to do. 

Before that legislature adjourned two years ago we started 
a non-partisan political league, the Farmers' Non-partisan Po- 
litical League in North Dakota. In a year and a half's time 



316 MARKETING AND FARM CREDITS 

that league was so well organized and carried on that it grew 
to have 40,000 members; 40,000 members who paid six or nine 
dollars membership fee to belong to that farmers' organization. 
We called it non-partisan, meaning that we could take men of 
either party regardless of their political affiliations and put them 
on the ticket to be elected to office, men who would represent 
the people. Why, partisanship never got the farmers anything. 

The farmers work 364 days in the year along the same line of 
work, working for the same thing, to produce their crops, and 
then on the 365th day, on election day, when they have a little 
political power, they go to the polls, or they have in the past, 
and the democrat will go his way, the republican will go his 
way, the socialist will go his way, the prohibitionist will go his 
way, and the progressive will go his way. In this way will they 
all pull in opposite directions. It has never made any differ- 
ence to the old gang who was elected, so long as they could con- 
trol him, as to what party he belonged to. There would be one 
standpat candidate, a half a dozen progressive candidates and 
all the old gang voted for their one man and the progressive 
farmers voted for their half dozen different candidates, but 
with only one result. 

And so we had a non-partisan league, and circular 
letters were sent out to every member in the state. 
They were to meet at a polling place on the 22nd of February 
and choose a man to be their delegate at the district con- 
vention. So at that meeting, at the end of March, — the state 
meeting, — those men got together, one from each legislative dis- 
trict, and chose their men for their state ticket regardless of 
party. 

I was not at that convention ; did not know that my name was 
considered. The afternoon after the convention was held they 
called me up on long distance, and one of the league boys at 
Fargo, who was on the line, said, "Frazier, we want you to 
come down here this afternoon." I told him I could not very 
well. "Well," he said, ''we want you to come; the boys are 
here from down the state and they want to see you." I told 
him that it was almost train time, and I had my overalls and 
rubber boots on and I could not go down very well, but I would 



LYNN J. FRAZIER 317 

come the next night. When I stepped off the train the next 
night the delegates stepped up and said, "Frazier, they have 
given you the endorsement for governor." That was the first 
that I knew I was going to get into politics. ♦ 

"Well, at the convention which was held there on the first day 
of April there were over* 2,000 representatives from all over 
North Dakota. They were the most enthusiastic bunch I ever 
saw at a convention, and I could not help but feel that there 
would be something doing in a political line this summer in 
North Dakota, and there was. 

Farmers Sweep a State 

We had a little pin, not quite as large as this one, but on 
which was ' ' The Farmers ' Non-Partisan Political League, ' ' and 
right across the front was "We Will Stick." That was our 
slogan, "We Will Stick," and a great many of the politicians 
of North Dakota did not think it would amount to anything. 
They said the farmers never had stuck together and never 
would. But as the candidates for office endorsed by the 
farmers went around over the state before the farmers and 
saw the enthusiastic crowds that came out and talked with them, 
we could not help but feel that they were interested, deeply 
interested, and that they were going to stick ; no question about 
it. We did not feel the least bit in doubt as to the result of 
the primary election, and when the primaries came around 
the farmers of North Dakota proved that they could stick. They 
also proved it again on the 7th of November, and they are still 
sticking. IMoreover, we are going to keep on sticking until we 
get some laws in North Dakota that will benefit the farmers. If 
there are any people on earth who need some special legislation 
for their special benefit they are the farmers and the working" 
men. For they work hard for what they get. 

Why, up there they even formed a good government league. 
Some of our larger towns in North Dakota formed a good gov- 
ernment league, composed of politicians and representatives of 
big business, who had practically controlled that state for the 
last 20 years. At that late date they woke up to the fact that 
North Dakota should have good government. 



318 MARKETING AND FARM CREDITS 

Why, if those men had showed the interest in good gover-u- 
ment in North Dakota in the last 15 or 20 years that they 
showed in the last 15 or 20 days before the primaries we would 
not have needed any farmers' organization at all. We would 
have had good government all the time. We would have had a 
square deal, and that is all the farmers are asking is a square 
deal. 

How the Fight Was Won 

Still there are a great many people in North Dakota who 
could not be reconciled to the fact that the farmers were taking 
part in politics. I happened to be in Jamestown one day — that 
is the town in which is located our state insane asylum — and I 
went out to the insane asylum to look around, interested nat- 
urally in the state institution, and while going through there 
I noticed a man who was working around the same as some of 
the others, and he seemed to be very sane and all that, and I 
asked the Doctor if that was one of the inmates, and he said it 
was, and so I fell behind a little and got a chance to speak to 
this man. I greeted him and he greeted me, quite naturally, 
and I said, "How does it happen that you are in here?" 
"Well," he answered, "I will tell you; I am a farmer. I used 
to live north of here a ways and I got to thinking that we should 
have $3 a bushel for our wheat; that we couldn't get along and 
make any money at anything less than that, and I got to think- 
ing about it and worrying over it so much that I finally went 
€razy, and they sent me down here." I told him it was too bad, 
and I hoped he would improve so he could soon get out, and 
he turned to me and said, "What are you in here for?" Well, 
I told him that I was a farmer, too, and that the farmers of 
the whole state had organized a league this last spring, and 
they had endorsed the full state ticket and I had the honor of 
being the man that they had put at the head of that ticket to 
run for governor. He looked at me in surprise. He said, "You 
are not crazy; you don't belong in here. You are just a damned 
fool ; you better go home and stay there. ' ' 

Well, as I went around over the state before the primaries 
getting acquainted with some of the business men in the towns 



LYNN J. FRAZIER 319 

they did not tell me those words in plain English but they looked 
at me just as if they meant the same thing. Some of the tywns 
we went into we met the business men in the afternoon 'and 
rented a hall in the evenijjg and invited them to come out and 
have a little friendly talk — a friendly talk to explain the situa- 
tion to them as to what the farmer's organization stood for, and 
what we hoped to accomplish; and tell them that anything 
that would benefit the farmers must necessarily benefit the 
business men, because the business men depended upon the 
farmers for their profit and their welfare and business. And 
in town after town we couldn't get a business man to come 
out and listen to us. Of course, they did not say much after 
the primaries, but at the election on the 7th of November in 
our little state up there there were 12,000 dissatisfied voters 
who voted for the president or the presidential electors but 
did not deign to vote the farmers' state ticket; 12,000 more 
voted for president in the North Dakota election than voted 
for the state ticket, because it was a bunch of farmers that 
were on there as candidates. 

What the Farmers' Program Includes 

I do not know how we will get along in pleasing those 5,000 
people who would not vote. The men that voted on the 
democratic ticket will be easily pleased; I think we can satisfy 
them. But those 5,000 who did not vote at all are going to 
be hard to satisfy. We realize that we have a hard job on our 
hands, but we are going to do the best we can and try to put 
across some laws that will benefit the whole state. Our program 
stands for state-owned terminal elevators, flour mills, packing 
plants, cold storage plants, hail insurance at cost, and some 
sort of rural credits that will give farmers their money at a 
low rate of interest. We believe we can put those things across 
as we hope to do; and that we can not only benefit the farmers' 
condition in North Dakota, but we can better every man in the 
state. 

The great war across the seas has made the United States 
one of the great commercial centers of the world, and the larger 
part of that great commerce that goes across there to the warring 
nations is made up of farm products; but it is not the farmer 



320 MARKETING AND FARM CREDITS 

who gets the war price. The farmer is not in the same situation 
that the manufacturer is who manufactures the war munitions 
or other products and sets his own price on them and makes 
an enormous profit. 

The farmer has to take the price that the grain combination 
and the packing combine put on his products; he has to 
take that price, whatever they are willing to give him, and 
keep on smiling. We believe that we should have something 
to say about the prices that we will receive for our products. 
The farmers are the only class of people on earth who produce 
wealth and at the same time have nothing to say about the price 
they will receive for their products when they get them ready 
for the market. "We work all year to get our products ready 
for market and when we get them ready for market we bring 
them to town and ask the other fellow what he will give us for 
them. Imagine a man bringing a load of wheat to the elevator 
and driving up to the elevator and telling that man what it 
cost him to grow that wheat, what he wants for a profit, and 
demanding the price. Imagine a man bringing a carload of cattle 
or sheep or hogs down here to the stock yards and telling the 
man what he thinks is a fair profit and demanding the price. 
Why, the chances are he would never get back home ; he would 
be committed to the insane asylum. 

Movement Spreads to Other States 

The Farmers' Non-Partisan League has organized in the 
states on all sides of North Dakota. We expect the 
movement to spread to all of the different states in the Middle 
West. In our campaign last summer we have done a great deal 
to stir up public sentiment, to get the farmers to thinking, to 
studying along political lines, and to voting. Why, we polled 
the biggest vote on the 7th of November by far that has ever 
been polled in the state, and if we can keep that interest going 
and arouse the interest in the other states that we have aroused 
in North Dakota we will create a public sentiment strong enough 
to control our marketing situation. 

We must have an open market for our grain and for our 
livestock; and when we have organized all these middle western 



LYNN J. FRAZIER 321 

agricultural states^ and succeed, as we are succeeding in North 
Dakota, we will have created public sentiment strong enough to 
put the grain combines and the packing combines out of busi- 
ness. " 

I believe that the only sure and practical method of bringing 
about the necessary reforms in our marketing situation that 
will work for the betterment of the producer and the consumer 
alike is the intelligent, common sense use of the non-partisan 
ballot. The unbought, independent ballot intelligently voted 
is the greatest power in this Nation today. It is a great princi- 
ple of American government that the majority shall rule. And 
the rank and file, the common people, the producer and the 
wage earning consumer are the majority in this whole nation. 
Then, why in Heaven's name can't we elect men to office who 
will honestly represent the majority of the people? I believe 
we can do it, and I believe we are going to do it. And it is 
mighty essential that we do that very thing ; it is of mighty 
importance to our own welfare, and of vital importance to those 
we love at home. And when that time comes, when we elect men 
to office throughout these states who will honestly represent the 
majority of the people then and not until then, ladies and gen- 
tlemen, can we hope to, solve our rural marketing problems or 
any other problem of the common people. 



322 MARKETING AND FARM CREDITS 



NECESSARY COST OF HANDLING GRAIN 
AT COUNTRY STATION 

F. W. Stout * 

The cost of handling grain varies at different stations, and 
is governed largely by the volume of business. For instance, 
one station may handle 300,000 bushels and the total expense 
be practically the same as at another station which handles 
600,000 bushels. And then again, there is no station that can 
use the figures of one year as a basis for the next year's busi- 
ness. An expense account can be used as a guide in fixing the 
margin on which to buy in order to insure a profit, but profit 
and loss ^^ave nothing to do with the actual cost of handling. 

As already stated, the cost of handling grain is determined 
very largely by the number of bushels handled; but there is 
another phase which must be taken into consideration, and that 
is the general crop conditions, or especially the quality of the 
grain to be bought and sold. There are, of course, many sta- 
tions where there is an unnecessary investment and unneces- 
sary employment of labor, all of which increases the cost of 
handling per bushel. I refer here to the maintaining of one 
or more unnecessary elevators and the help which it takes to 
operate them. As a rule one elevator can handle 100 per cent 
of all the grain tributary to a station, and at practically the 
same expense as if it only handled 50 per cent. 

In my opinion there is no other one thing that would tend 
to lessen the cost of handling grain at the country station more 
than for the groAver to use as his motto "One elevator at a sta- 
tion" and live up to it, but there are so many of us that look 
through a pair of glasses made from a half or a quarter of a 
cent that we are blinded from seeing all the other benefits that 
lay beyond ; and never until the grain grower delivers 100 per 
cent of the grain he has to market to his own elevator can he 
expect to attain the minimum cost of handling. 



* F. W. Stout is manager of the Farmers' Cooperative Elevator Com- 
pany of Ashkum, Illinois. 



F. W. STOUT 323 

I might be asked wliat would become of the other elevator. 
My reply would be that we are living in an age where the 
thing should be done that is of the greatest service to the 
greatest nimiber, and I think that will apply in this ease. 

Costs at Ashkum Elevator 

In order to be exact, I have taken the figures of our station — 
Ashkum, Illinois. The accounts have been kept by competent 
bookkeepers and been audited by a certified public accountant 
each year. In these accounts bushels have been watched as 
closely as dollars, and a complete record has been kept of all 
items of expense chargeable to grains, including regular sal- 
aries, extra labor, repairs, supplies, telephone, telegraph, fuel, 
taxes, insurance, interest, auditing of books, shrinkage, three 
per cent depreciation and six per cent interest on investment. 
These figures do not include terminal charges. I have taken the 
figures for a period of six years — from 1910 to 1916, inclusive — 
and find that we handled a total of 2,801,000 bushels of corn 
and oats at an actual cost of one and four one-hundredth cents 
per bushel, I have taken the largest and smallest year's busi- 
ness during these six years, and find that during 1914, the year 
of our smallest business, we handled 320,161 bushels at a cost 
of one and four-tenths cents per bushel; while in 1915, the year 
of our largest business, we handled 613,589 bushels at a cost of 
eight-tenths of a cent per bushel. This illustrates what I said 
regarding a station not being able to handle every year's busi- 
ness on the same basis. As you will note by the figures given, 
the actual cost per bushel of handling the 1915 crop was only 
two-thirds of the cost per bushel of handling the 1914 crop, or 
eight-tenths of a cent per bushe] against one and four-tenths 
cents. 

During the j^ear 1915 our elevator handled 67 per cent of all 
grain delivered at the station, or 613,000 bushels, at a cost of 
eight-tenths cents per bushel. We could have handled the re- 
maining 33 per cent at a cost of one-eighth cent per bushel. 
Why? Because we had already charged interest, depreciation, 
insurance, taxes, etc., and had enough surplus labor charged, 
which was necessary in order that we might be in a position to 
care for business that might come at any time, to have handled 



324 MARKETING AND FARM CREDITS 

the remaining 33 per cent of this crop of grain for just the in- 
surance, fuel, shrinkage and whatever the wear and tear of 
handling might have been. 

In the face of these facts it seems that tlie farmers of our 
community paid last year at least $4,000 for handling grain 
that could have been handled through their own house at a cost 
of $350. 

Cooperation the Solution 

If producers are at all interested in the economy of doing 
this thing they should get into this cooperative movement. It 
is the only way by which they can accomplish anything for 
themselves. To be sure, it takes time and labor to convince some 
men that they can profit most by working together. It takes 
time to educate a community of producers up to that point 
where they can see that competition is not the life of trade, but 
cooperation. No sane farmer hires two men to do the work of 
one, and why should he support two or three elevator concerns 
at a station when one can easily handle all the business. No 
manager of a farmers' elevator company should put his feet 
on the office table and complain about the action of his stock- 
holders in not patronizing their own company exclusively. He 
should arm himself with the arguments and go out and con- 
vince these men that a new economic era is at hand and that 
the greater profit to them is in doing their own business together 
through their own institution. 

Some of the cooperative elevator companies in this state in 
order to keep their surplus labor working have entered into 
other lines of business. They handle lumber, building material, 
coal, fencing, feed and twine. From observation I find that 
these organizations are generally the most successful, for they 
are in a position to get the best results from their labor and in- 
vestment. 

In our own company the average annual net profit on grain 
for a period of six years has been a fraction less than 9 per cent, 
while the profit on the grain and side lines combined has been 
a fraction more than 19 per cent net. This makes our side line 
business a very valuable asset on account of the fact that we 
are able to handle all the business at a very small expense. 



F. W. STOUT ,325 

The cost of handling grain under present conditions is very 
much more than would be necessary under a more thoroughly 
organized cooperative system. The figures I have given are 
taken from an average station, possibly a little above the aver- 
age in the volume of business done, and from a business that 
has been operated for the benefit of the producer, and not for 
any one man or any particular set of men. 



326 MARKETING AND FARM CREDITS 



BOARDS OF TRADE AND THE NATIONAL 
WELFARE 

John E.. Mauff* 

Mr. Griffiu, I believe, as long as October or November ac- 
quiesced to open the meeting here today and give us this address 
on handling charges at terminal markets, and has had some 
correspondence with Mr. Myers, the assistant treasurer, and Mr. 
Myers has stated in his letter a few points that he wished to 
have covered. Of course, Mr. Griffin having a sudden bereave- 
ment gave the speaker very little time to prepare and every- 
thing said may be in a way disconnected, but you will have to 
accept it in that way. It is the best I could do on short notice. 

As to the Chicago Board of Trade, I would like to say a few 
words. You have with you today Mr. Greeley, who knows as 
much about the Chicago Board of Trade as I do, and he is your 
friend, and probably anything I say will only be what he has 
already told you. We have 1,622 members. Over 400 of these 
memberships are held by men who are not residents of our city. 
They would classify as non-resident members, although non- 
resident members and resident members have equal rights. 

Membership Open to Farmers 

The Chicago Board of Trade Rule 10 on Memberships has, 
we might say. but two qualifications for applicants; to be of 
good character and a man of some credit. Our membership 
is open to all. We welcome as a member the humblest farmer 
of our agricultural section. We welcome him and as a member 
he is the equal in his membership privilege of any other member 
of our association. We have no limit to our membership. The 
Chicago Board of Trade is not a limited organization because 
a limited organization might result in a monopoly. It is there- 
fore unlimited. There are over 100 memberships changing 
hands every year. We have members coming in and we have 



* Mr. John R. Mauff is vice-president of the Chicago Board of Trade, 
and well known in grain marketing circles. 



JOHN R. MAUFF 337 

other members going out. One of the advantages of being a 
member of our organization is the lesser rates of commission 
enjoyed. A non-member must pay about double the rate of 
commission that a member pays. 

The memberships are worth about $7,500. The interest on 
$7,500 and the dues amount to about $500 a year. It is not an 
organization diificult to belong to. Prosperity in the West, I 
think, would bring into our membership hundreds of agricul- 
turists who would think nothing at all of paying $7,500 for a 
membership. So we are open to all. All men of good character 
and some credit are entitled to membership in our organiza- 
tion. There are other organizations, I believe, of similar ob- 
jects where the membership is limited, but I am glad to say that 
our membership is unlimited and I think will always remain so. 

Commission Rates Charged 

Now, the question of the rate of commission is one of the 
things I would like to bring to your attention, because Mr. 
Myers in his letter has asked in regard to our rates of commis- 
sion. We will discuss the rates of commission for those who 
are not members of our organization, who do not have a mem- 
bership registered in our organization. A membership regis- 
tered in our organization carries the membership privilege to 
the firm, individual or corporation that the membership is reg- 
istered 'for. At one time the rate of commission on purchases 
and sales for future delivery was one-quarter of a cent per bushel, 
or $12.50 on 5,000 bushels. That was in the days of the cheap 
cost of living. At the present time, with the high cost of living, 
and the high cost of living hits our membership as it hits every 
one else, the rate is only $7.50 for 5,000 bushels. I will offer 
a comparison to show that we are trying to bring your products 
and your commodities to the consumer at a very low cost to you 
by stating what other producers pay. One hundred bales of 
cotton today is worth $10,000. That is about what 5,000 bushels 
of wheat is worth ; a little more. A few weeks ago 5,000 bushels 
of wheat was worth $10,000. We will transact your business 
on our exchange on this $10,000 worth of wheat for $7.50. The 
cotton exchange gets $20 for that same service. They raised 



328 MARKETING AND FARM CREDITS 

the rate from $5 to $20 and their business has boomed; it has 
not affected the volume of their business at all. Take cotton- 
seed oil: For 100 barrels of cottonseed oil, they charge you 
$15 or $7.50 each way, $7.50 for buying and $7.50 for selling. 
In coffee 250 bags the round turn is $20. In stocks, 100 shares 
of stock of a par value of over $10, the rate is $25 for buying 
and selling. So you can see, gentlemen, that you are in a class 
by yourselves in getting our kind of service at so much less 
than the cotton growers or the coffee growers, or the men who 
are engaged in buying or selling cottonseed oil or stocks are 
paying. 

War and the Boards of Trade 

I just want to call your attention to one other thing that is 
very interesting and it is historical. The Liverpool Corn Trade 
Association before the war was trading in your commodities for 
future delivery. When the war started, or shortly after that, 
a great many of the members went to the front, some never to 
return. The trading in your commodities for future delivery on 
that exchange ceased. The business has since been coming 
from the British Isles to America, to Chicago, to our Board of 
Trade. The closing up of the Liverpool Corn Trade Associa- 
tion, or the discontinuing of the trading there in your com- 
modities for future delivery did not remove the necessity for 
trading in those commodities for future delivery. In fact, the 
Englishmen found out that they could not afford to stop ; they 
had to continue placing their hedges; they had to continue 
trading in your commodities for future delivery, and they are 
doing so today, through our association. Board of trade houses 
that are handling the business, considering there is much ad- 
ditional risk, are charging three-eights to one-half a cent a 
bushel commission instead of the $7.50 rate, and Englishmen 
are so well pleased with the executions that the Chicago Board 
of Trade will never lose, at least a large share of that business. 
And the reason is this: With the large membership that we 
have you can always trade in wheat, corn or oats close to the 
last quotation, and you can trade in almost any amount with- 
out creating very violent fluctuations in the market. And that 
is what they consider of great value, quick execution, honest 



JOHN R. MAUFP 329 

^execution in large amounts without too- violent fluctuations of 
the market. And the Englishmen are willing to pay three- 
eights to one-half a cent a bushel, whereas the minimum fate is 
^7.50. 

Effect of Futures Trading- 
There has also been some mention made in Mr. Myers' letter 
of the effect of this future trading; its effect on the cash com- 
modities. Now, my specialty has been dealing in barley. I 
have devoted my entire life to the study of barley, and particu- 
larly malting barley, and the improvement of the malting bar- 
ley for brewing, and malting purposes. There has never been 
in my time future trading in barley. This is the one exception. 
"We have future trading in wheat, oats, corn, flaxseed, timothy 
seed, and clover seed, but I have never known future trading 
in barley. And I want to say that because of that fact the mar- 
gins exacted from the growers of barley by the dealers in bar- 
ley is always greater than they exact in handling the other 
commodities. It has to be so. If I buy barley I have an un- 
usual risk until I find a buyer, and for that reason I must have 
an unusual margin of profit. In fact, when I operated ele- 
"vators in the country it was necessary to the rule of safety first 
to demand as much as five cents a bushel under what was the 
ruling market price because of that unusual hazard. In wheat, 
corn and oats the moment of purchase I find a small profit in 
the transaction and I can hedge it. I immediately through that 
process can possess myself of that small profit. I am satisfied 
with that and because of the hedge can handle those commodi- 
ties on a very small margin. But in barley you cannot do that 
and I think that is pretty generally known to anyone who has 
been engaged in the barley business. 

Cutting Costs of Handling Barley 

In the City of St. Louis we paid at one time a commission 
■on barley of two cents a bushel. Think of it, in those days 
of the cheap cost of living the commission merchants to sell 
our barley received two cents a bushel. And when the business 
was handled in the country on a lesser margin it became neces- 



330 MARKETING AND FARM CREDITS 

sary for us to demand in St. Louis that those commission mer- 
chants reduce their toll. Did they do it? Not at all; they 
would not accept less than two cents a bushel. And those com- 
mission merchants then became buyers and sellers of barley. 
They would buy the barley and they would merchandise it, and 
in that way endeavor to get more than the one cent a bushel 
that we were willing to pay. Noav, at the present time with the 
high cost of living your barley on our board of trade will be 
sold for one cent a bushel and handled on a smaller margin 
today than ever before. 

What has done that? Competition. And the competition 
for barley comes from the maltsters, the brewers, the oat mixers, 
the cereal companies and the shippers of barley. You visit on 
the exchange what is known as the barley corner, and you will 
find all those interests represented. And, have they an agree- 
ment as to price? Just try to enter the market and see the 
competition you are up against in trying to buy a few cars of 
barley from Minnesota or Iowa or Wisconsin, and see the prices 
you have to pay. Competition? There was never such compe- 
tition as exists on the board of trade in the City of Chicago to- 
day for all of our commodities, and, if you do not believe it, 
you have my invitation to come up on our exchange floor, and 
we will demonstrate this to you as a living and a moving pic- 
ture ; you can see it in operation. 

Is Monopoly Possible? 

And I want to relate another little circumstance, talking 
about monopoly. Where does monopoly exist in your com- 
modities? When I was in the AVest I found monopoly existed 
usually at the country stations. At the country stations there 
might be a half dozen elevators, and if all those elevator buyers 
competed for your commodities as we compete for them on the 
board of trade you would have a wonderful market, but I 
know how it used to be done. But those days I hope are passed 
forever. Take one little town, Lake City, Minnesota, famous 
for its barley, famous everywhere for its barley. Its barley was 
known in all the brewing centers of the East as well as the 
West. There was one little elevator there among six or seven. 



JOHN R. MAUFF 331 

and we owned the elevator. We were unable to compete with 
the Big Company, but they offered us $5,000 a year if we would 
simply turn the elevator over to them. We turned it over. 
They paid us $5,000 a year, these people that were monopoliz- 
ing the barley market in that country. And when they who 
were monopolizing the market got to the end of their rope, 
which they did in time, although known as the "Barley Kings," 
we sought to dispose of that elevator and the very best price 
we could get was what? We sold it for $250. That was all 
we could get for the elevator that monopoly valued at $5,000 
a year. Now, that is real monopoly. There was no competi- 
tion in that market. This "Barley King" made the prices os- 
tensibly at every elevator in the town; made the prices for 
them all and of course big margins were exacted of the pro- 
ducers. Now such a thing is impossible on the Chicago Board 
of Trade. And why? Because of our large and diversified 
membership. You can go down on the board of trade today 
and if you want to sell any kind of grain or buy any kind of 
grain you can do it at once. There is always a buyer for any- 
thing you want to sell, and always a seller for anything you 
want to buy. It is a big, broad, open market, far removed 
from monopoly. 

Take the cash oat market. Why, there is competition between 
the cereal company, the shippers and the elevator people all 
the time. Flour mills are competing for the wheat against the 
shippers, and the elevator companies. In the corn, you have 
the Corn Products Company, the largest of its kind in the 
world. They have their buyers competing wdth brewers, who 
are using some corn in beer as a substitute for barley, and, 
with the shippers and with all the other interests. It is a good 
healthy competition that is the life of our trade, and Mr. 
Greely knows, that without competition the board of trade 
would live but a very short time. 

Now, some people remember the oil business. I know in the 
day of the oil exchange in Oil City, Pennsylvania, when I was 
a boy, there was no monopoly in oil. In those days it was a 
great big open market and everybody had the privilege of 
trading in oil, but when they killed the oil exchange the indus- 
try merged into a trust that had control of the situation and 
has had control of it ever since. 



332 MARKETING AND FARM CREDITS 

How Competition Affects Wheat Prices 

Now, I want to quote, to show that competition does exist for 
your products. What was the result of yesterday's market? 
December No. 2 corn closed at 921/4 cents. The cash sales for 
this same grade of corn yesterday were 961/4 to 97 cents. Does 
that mean competition, or does that mean control of the mar- 
ket? No. 4 mixed corn, which is an inferior corn, two grades 
inferior, sold higher than the price of December No. 2 corn, for 
future delivery. A certain elevator man told me yesterday 
when I spoke of this question of monopoly, "If. they come down 
here and see the elevator people today competing for the corn 
that comes into the market, — they are almost fighting one an- 
other to get possession of this corn, therefore the big premiums 
— they won't feel that there is no competition." December 
standard oats ranged 53 to 541/2 cents. Now, cash standard 
oats sold at 55% cents, so there is also a premium. No. 3 
white oats sold fully as high and higher than the standard oats 
for future delivery. No. 4, two grades below, sold fully as 
high as the December oats for future delivery. December 
wheat closed around $1.70 and cash wheat, a grade lower than 
this wheat, sold at $1.81 on the tables because of the competi- 
tion that I have already mentioned. 

I am not going into this subject too fully, but I want to call 
your attention to one thing that has probably been overlooked 
all along the line. You will remember when the war broke out 
about the first of August, 1914. What happened? There was 
a large failure on the cotton exchange, a very large failure. 
And what did the cotton exchanges do? Both in New York 
and New Orleans? They closed their doors. And before they 
closed their doors December cotton had had a tremendous de- 
cline, but December cotton was still selling at 10.75 cents, and 
in order to save the financial situation for their own members 
they organized a cotton corporation and took over all of the 
outstanding long contracts of cotton on the books of their mem- 
bers on the basis of nine cents for December delivery. Any 
commission house, members of the exchange, could sell to the 
corporation which was formed at that time by the bankers and 
the cotton exchange, the cotton belonging to their customers 



JOHN R. MAUFP 333 

on their books at nine cents. The customers lost their long con- 
tracts which were closed out in that way, and fortunately so 
for these customers at 9 cents. Now, that was a very commend- 
able thing for the cotton exchanges to do, because without that 
action many of the houses would have failed, and then can any 
one say what prices would have been procurable for their cus- 
tomers? I am not criticising the cotton exchanges. I am just 
trying to show you what happened. 

Did Opening of Exchanges Aid Cotton Market? 

Now, they remained closed until the 16th day of November. 
And what was cotton worth when the exchanges opened? De- 
cember had closed at 10.75 cents. The corporation had taken 
over all this long cotton at nine cents. And you know what 
happened in the interval. They were begging every one of us 
in the North to buy a bale of cotton in the South to help the 
cotton growers who were in great trouble, in great need, and in 
great tribulation because of the situation. December cotton 
opened on the 16th day of November at 7.15 cents. The stock 
exchange also closed, and the Board of Trade of the City of 
Chicago called a special meeting of its board of directors, of 
which I was a member, one morning before the opening to de- 
cide whether we should close the exchange or keep it open. 

Why Chicago Board of Trade Did Not Close 

Now, to our own membership the closing of the exchange 
would not have been a hardship at that particular time, but 
it would have been a serious blow to the producers and the 
country at large and so we did not close. And I will just read 
you what was said in one of our publications that day upon 
the action of the Chicago Board of Trade. This is from the 
"Daily Trade Bulletin" of July 31, 1914: 

"The Chicago Board of Trade is certainly en- 
titled to the credit of remaining open and transacting 
business, as it has in all future financial disturbances. 
Notwithstanding the unsettled condition of the mar- 
kets, with very frequent and wild fluctuations in 



334 MARKETING AND FARM CREDITS 

prices, no failures have occurred, and all firms have 
cleared through the Clearing house. July contracts 
have been closed up rather satisfactorily, with the ex- 
ception of mess pork. Trading, it is true, has been ma- 
terially curtailed, with new business somewhat limited. 
The Chicago Board of Trade has weathered the finan- 
cial storm, due largely to the action of its officials and 
some of the leading houses in the trade." 
And when the stock exchange was closed, what were stocks 
and bonds worth? They were worth just exactly what some- 
body was willing to pay you for them and no more, and that 
somebody made his values to suit himself. I saw St. Paul sell- 
ing in Chicago during that time at 71 cents. Was there ever a 
quotation as low as 71 cents'? I am not criticising this some- 
body. He came to the rescue of those that had to sacrifice their 
holdings. But did the growers of wheat, corn, oats and other 
commodities have to sacrifice anything? They did not. And 
why? Simply because the Chicago Board of Trade remained 
open. It gave you daily quotations that were official and the 
result of competition in an open market. 

Effect on Market Prices of Open, Exchange 

During that time the bankers would rather have a cereal 
warehouse receipt in the city of Chicago than a bond, because it 
was a liquid asset, and at the time these other exchanges closed 
December wheat was worth 91 cents in Chicago, Corn was 
worth 60 cents and oats 38.8 cents for December delivery. Now, 
remember the decline in cotton and stocks and everything else 
while the exchanges were closed. And this was the result to 
your commodities in the keeping open of the grain exchanges. 
December wheat that had closed at 91 cents on the 29th of July 
was $1.15 on the first of September. Corn that was 60 cents a 
bushel advanced in 30 days to 721/2 cents. Oats that were 38.8 
cents when the other exchanges closed, sold 30 days later on 
our exchange at 52.8 cents. What did the keeping open of our 
exchange mean to the growers of your commodities ? I will just 
read one more article and then conclude, unless some one 
wishes additional information, and I think this is what caps 
the whole climax. It comes from the secretarv of the New Or- 



JOHN R. MAUFF 335 

leans Cotton Exchange. He was asked the question, "On what 
date at the commencement of the war in Europe was the cotton 
■exchange in your city closed? When was the New York cotton 
exchange closed? When were they opened? What was the 
price of your active futures when the market closed, and what 
was the price of your active futures when it opened? What 
was the highest price in the future market within six months 
after the cotton exchange opened? What was the condition of 
the cotton market in the South during the period when the cot- 
ton exchanges were closed? Now, observe his answer to the last 
question as to what the condition was in the South while the 
€otton exchanges were closed: 

"The condition in the South during the period when 
cotton exchanges, in which contracts for future deliv- 
ery of cotton are made, were closed, was one of chaotic 
uncertitude. With the great price-regulating mediums 
closed, the sources of constant changes in values were 
not available, and as a consequence the prices varied as 
much as one-half to one cent per pound in towns ad- 
jacent to each other. There was no way for the grower . 
to post himself as to changes in values and it was a 
question of selling the best way he could. Another 
very important factor which was removed by reason of 
the exchanges being closed was the innumerable num- 
ber of buyers who purchased cotton and sold futures 
as hedges against these purchases. Inasmuch as the 
futures markets were closed, this class of buyers were 
per force retired from business and the only purchaser 
the farmer had was the one who had immediate need 
of the cotton or who was induced to buy cotton because 
of the almost ridiculous price at which he could secure 
the staple. In other words, trade conditions had retro- 
graded and business was being done along the lines it 
was conducted during the time of our forefathers. 

"It is the honest belief and opinion of the most pro- 
found students, as well as the best posted business men 
of the country, that the closing of the exchanges in the 
early days of the European war demonstrated as well 
as established the absolute necessity and importance of 



336 MARKETING AND FARM CREDITS 

transactions for future delivery. With the constant 
changes in prices available, every moment of the day, 
by reason of future contracts, the farmer, the buyer, 
the factor, the banker and every one interested in the 
cotton business knows at a glance the price of the ar- 
ticle, and is thus able to intelligently base his transac- 
tions ; shut this light out and a state of darkness sets 
in comparable to business methods of the medieval 
ages. 

"During the interim between the closing and the re- 
opening of the contract exchanges, this institution- 
received numerous telegrams from interior markets, in. 
some instances from exchanges and in others from in- 
dividuals, urging a prompt resumption of the contract 
business; because, under existing conditions, it was 
impossible to trade with any degree of safety, and con- 
sequently the market for spot cotton was much re- 
stricted. 

"The farmers of the South, who in former years had 
been to a certain extent opposed to future trading, 
quickly recognized the need of an unrestricted and 
open market, and in convention assembled at different 
times adopted resolutions endorsing future trading and 
recognizing it as a necessary modern trade adjunct." 

Farmers' Union Indorses Cotton Exchange 

In conclusion I will read you just one of the many resolu- 
tions of cotton growers on that point, because they have had 
meetings and passed resolutions. Now, this is a resolution of 
a body of farmers, and I will tell you just who they are when 
I conclude : 

Whereas, the State of Alabama through its legis- 
lature in September last enacted a measure in favor 
of legitimate transactions in cotton future contracts, 
which at the same time prohibited, under severe pen- 
alties bucket shopping, which is gambling on the price 
of cotton with no intention on part of the gamblers to 
either receive or deliver the cotton claimed to be called 
for; and 



JOHN R. MAUFF 337 

Whereas, legitimate business on the exchanges in 
legal contracts is a help as a price insurance to the 
farmer in disposing of his products, while the bucket' 
shop is a curse to the country, encouraging petty 
gambling by irresponsible parties; 

Now, Therefore, Be it Eesolved that we, the mem- 
bers of the President's Association of the Farmers' 
Educational and Cooperative Union of America and 
members of the marketing committee of said organi- 
zation, in convention assembled at New Orleans, Louis- 
iana, this the 9th day of March, 1916, most respect- 
fully urge that every cotton state adopt a measure sim- 
ilar in form to the Alabama law ; 

Resolved Further, that attention be called to the 
fact that the Alabama law is an endorsement of the act 
of Congress known as the United States Cotton Fu- 
tures Act, which act is the result of years of study in 
the interest of the producers of cotton by the best 
brains and the ablest men representing the Southern 
states in both branches of Congress ; further that its 
practical trial during the past year has demonstrated 
that (excepting Section 11 which restricted business 
with foreign countries) it meets the needs of the cotton 
grower, eliminating evils which have heretofore been 
complained of; 

Resolved Also that the farmers of the South claim 
the right to dispose of their cotton either by future 
contract or otherwise as they may deem proper and 
that they claim the right to buy or sell legitimate or 
legal future contracts at home or abroad whenever or 
wherever they may consider their best interests de- 
mands, further that they are opposed to any law or 
laws that may in any manner restrict them in the free 
exercise of their judgment in reference to the handling 
of their business. 

0. P. Ford, president and member of the market- 
ing committee, Farmers' Union of Alabama; McFall,. 
Alabama. 

J. L. Shepard, president and member of the mar- 



338 MARKETING AND FARM CREDITS 

keting committee, Farmers' Union of Florida; Greens- 
borough, Florida. 

I. N. IMcCoLLiSTER, president and member of the 
marketing committee, Farmers' Union of Louisiana; 
Many, La. 

H. N. Pope, president and member of the marketing 
committee, Farmers' Union of Texas; Fort Worth, 
Texas. 

0. W. Taylor, president and member of the mar- 
keting committee, Farmers' Union of Oklahoma; Eoff, 
■ Oklahoma. 

COSTS IN EXPORTING GRAIN 

Julius H. Barnes * 

In presenting the question of export trade in grain and par- 
ticularly of wheat, I could give you all manner of statistics. I 
could trace the production in various sections of the globe and 
its distribution in other consuming sections, and I would prob- 
ably lose your interest in the subject. I would rather try to 
approach the subject from a more human side and one which 
will perhaps more easily and readily enlist your interest. 

Every man likes to have a successful business. It is a right- 
ful pride that a business should be successful, but I wonder how 
many of j^ou appreciate that men who are in large businesses 
today are, in fact, in that business because it appeals to their 
imagination and believe they are also serving a useful public 
purpose and the fascination of a business which reaches into all 
sections and to all manner of people. 

To me the export wheat trade is a very fascinating study. 
To cable at night and have your offers laid on the table of mill- 
ers in Great Britain and France and Germany in competition 
w^ith the merchants of Argentina, India, Australia and Russia ; 
"to feel that you must so perfect your methods of distribution, 
so eliminate all unnecessary cost that you must lay down grain 
there in competition with cheap labor ; this to me is a very inter- 

* Mr. Barnes is a prominent exporter of Diiluth, Minnesota, and 
New York City. He has devoted a life to grain selling and is an au- 
thority on export questions. 



JULIUS H. BARNES 339 

esting and fascinating study. I ^Yish I conld make you see the 
great lane of commerce in which wheat moves. 

How Wheat Marketing is Continuous 

Wheat is always in motion as no other crop is. Every month 
in the year is a harvest month in some section of the globe. As 
late as 1788 Great Britain raised its own supplies of wheat. 
After 1788 it steadily increased its imports of wheat until its 
manufacturing industries today annually require 240,000,000 
bushels of wheat alone. After the cry of Great Britain comes 
that of France, of Italy, Germany, and the Scandinavian coun- 
tries, and it requires 500,000,000 bushels of wheat moving across 
the oceans in transit each year to supply their lack of foods. 

I wonder if it has ever occurred to you that it is a strange 
thing that whatever the prosperity of the United States today 
may owe to its manufacturing development, whatever it may 
become in a few years as a financial agent, laying toll on the 
finances of the world, that it still remains true that the founda- 
tion of our prosperity was laid in the broader lands of our West 
and the crop productions thereon. Have you ever wondered 
how it could be that a country with high priced labor, with its 
grain fields 1,500 and 2,000 miles from a seaboard could compete 
and could prosper in competition with the cheap labor countries 
of Russia and India and Argentina? When you remember that 
the Argentina grain fields are almost entirely within 24 hours 
run of a seaport; their furthermost grains can be reached 
in 48 hours by rail haul from a good shipping seaport and ocean 
transportation has always been cheap ? Have you ever won- 
dered how it was that our agricultural regions have become 
great consuming markets in themselves and the streets of our 
country towns are lined with automobiles? There must be some 
deep, underlying factor that enables us to meet such competi- 
tion and to have prosperity thereon. I wonder if you will 
agree with me when I say that I believe it is due to two great 
factors, and the factor which I Avill put first is the great fresh 
water system of the great lakes. The Great Lakes stretch 1,500 
miles inland, as broad and deep as the ocean, -without current 
and tide ; they are an ideal transportation lane. Let me show 
you what I mean : in 1844 Lake Superior was cut off from deep 



340 MARKETING AND FARM CREDITS 

water transportation by the shallow falls of St. Mary's at the 
Soo. In 1844 it is recorded that all the commerce in and out of 
Lake Superior during the season of navigation was transported 
around those falls by one old grey horse and a cart. In 1846 
this had increased so tremendously that two double teams were 
added and the entire transportation was shipped and handled 
by the means of three teams and the cartage which they could 
haul at that time. At that time the State of Michigan began 
the construction of a shallow canal around the falls of St. Ma- 
ry's, and in 1855 that was opened, giving 12 feet of water be- 
tween the western end of Lake Superior and the other lake 
ports. In that year 14,500 tons of shipping went in and out of 
Lake Superior. Commerce increased then by leaps and bounds 
until this year around the falls of St. Mary's and through the 
canals which have been created there, there will move over 
100,000,000 tons of freight. 

Great Lakes Cut Transportation Rates 

Now, let me say to you, the wheat rate from the western end 
of Lake Superior to an eastern lake port is normally II/2 cents 
a bushel. The rail haul for that distance is 121/^ cents. Coal is 
carried from the Lake Erie ports to the western end of Lake Su- 
perior for 30 cents a ton. By rail the rate is $2.35 a ton. Ore 
from the mines of Minnesota is carried normally for 40 cents a 
ton, while the rail haul ranges from $3.50 to $4 a ton. In other 
words it is a safe statement to make that on every ton of freight 
there is a saving made of $3 a ton either to the consumer of 
grain or the consumer of iron and forest products. 

Since the first canal was opened in 1857 there has moved 
through Lake Superior canals over one thousand million tons. 
It is safe to say that $3 a ton has been saved in transportation 
charges, which has meant three thousand millions of dollars to 
this country in the 60 years since the first canal was opened. 
And remember, that is only one lake. There is enormous com- 
merce on Lake Michigan unrecorded. Do you see what I mean 
when I say that no other factor in the United States has had 
so much to do with our commercial development and prosperity 
as the system of fresh water transportation on the Great Lakes. 



JULIUS H. BARNES 341 

Organization of Grain Sales' System 

Another factor to which I would attribute the prosperity of 
our grain country and its development is the system of grain 
markets, the facilities of which are such that an enormous busi- 
ness can be safely carried on on so narrow a margin of profit 
that credit is readily available. You know that every grower 
in our country can by telephone and mail know quickly and 
accurately the value of his grain in the nearest primary market. 
You know that everj^ grower of grain can ship his grain to be 
marketed at a commission charge of not over one per cent. You 
know that for that one per cent he buys honest and intelligent 
service. 

Perhaps you have the idea that between the primary market 
and the foreign market, because of your lack of knowledge of 
conditions, there is an enormous profit absorbed by the expor- 
ters. There is no mystery about exporting. Ten thousand 
clerks employed today in the exporting houses could list you 
correctly the items which make up the cost of selling to foreign 
markets; the rail freights, the ocean insurance, the foreign 
brokerage and other charges, and could teach you accurately to 
reduce foreign credits and drafts into American dollars. One 
hundred export houses located in all cities of this country. New 
York, Baltimore, Philadelphia, Boston, Montreal, Galveston, 
New Orleans, Kansas City and Chicago, Minneapolis, Seattle, 
"Winnipeg, are all competing for this business day by day. I 
have been in the export business almost a quarter of a century, 
until this war started and the risks which it involved were offset 
by a larger profit, I have never had one year when we could 
show one cent a bushel profit on the grain we have handled. 

How would you like to trade in Russia where the continental 
hO'Uses have built up enormous establishments by paying the 
grower what they pleased. The country was parceled between 
these houses, absolutely, and there you have an example of what 
manipulation means. 

Fighting for a Free Market in Argentina 

In Argentina (until the railroads corrected it) the big Argen- 
tina houses would rent the great sheds constructed by the rail- 
roads for the storage of sacked grain. You know, in Argentina 



342 MARKETING AND FARM CREDITS 

the farmer still drives to the station with his grain sacked. 
"When he drove in he was told that all the stacking sheds are 
rented from the railroad. The buying agents tell him they can- 
not store it but they will buy it at their own price. Step by 
step they have done what we had already done. They are try- 
ing by legislation to do what we have already done by individ- 
ual initiative, to create and establish a free market, one that is 
always available. 

Factors That Govern Grain Prices 

There is a feeling, I think, among the consuming public that 
grain, like butter and eggs, has seasonal abundance and sea- 
sonal scarcity and that great grain houses are storing up and in 
the scarce season exacting high prices. There is nothing in the 
history of grain to support such a theory. Take the history in 
the last five years, for instance, and you will find that in five of 
those ten years, the high point in grain was made in May, just 
when Texas gets its cut, in three of them in July, one in Octo- 
ber, just as spring wheat begins to move, and only once in the 
last 10 years has the high point of wheat been made in Febru- 
ary, at the time when butter and eggs are at their highest. 
Turning then to low points we find that in three of those years 
the low point was in March and two in April, just as the sea- 
sonal scarcity of wheat should develop if that theory was cor- 
rect. It is the sj^stem of great terminal markets with their 
everyday trading which enables every grower to choose his time 
when he can sell it in some form. 

People say there is no reason for the fluctuation in grain day 
by day, minute by minute. There is, in wheat. As I said, it 
is a great world's crop. Every month the crop is maturing 
somewhere. Every month its progress is under favorable or 
unfavorable weather in some section of the globe. The con- 
suming millers in Europe, if America is too high, hold America 
off at length and buy from England or Australia or Argentina. 
They search the globe. The fluctuation in wheat is only the 
effect of the speculators and millers and producers trying to 
anticipate some crop progress in some section of the globe. 
That is the reason the price records its changes ; that is the rea- 
son of the fundamental underlying fluctuations. Thus, manipu- 
lations are only the ripples on the sea of commerce. 



JULIUS H. BAHNES 343 

Embargo on Grain Export Bad Policy 

This leads me to the question of embargo. There has been a 
great wide agitation in this country to deprive the grain seller 
of the high prices which he is now enjoying. Those prices are 
made by reason of the fact that in Europe an army of men taken 
from producing purposes has been turned into an army manu- 
facturing munitions. Europe is a great armed camp instead of 
an agricultural district, and their needs are reflected in the 
price you are getting for your grain today. And yet the in- 
dustrial sections are trying to deprive you of the benefit of that 
price. 

I remember receiving a few days ago a printed circular with 
no name responsible for it, and reading something like this, as 
emphasizing the need of embargo : ' ' Surplus carried over from 
last crop 96,000,000 bushels." They arrive at this by taking 
last year 's crop, the government report of consumption, and 
adding 74,000,000 bushels fed to cattle last year, and giving a 
surplus of 96,000,000. The government distinctly stated that 
in their report of consumption last year, they included that 
74,000,000 of wheat, yet this statement carries the rate of eon- 
sumption per capita arrived at including 74,000,000 in this 
year's consumption, although we know that there is no wheat 
being fed at all. The government, the official statement, gave 
the crop as 72,000,000 in farmer's hands and 82,000,000 in sec- 
ond hands. 

Yet this statement, making the statement first that it is made- 
from government publications, starts with 96,000,000 and then 
they add this crop and then they take 25,000,000 for short 
weight of spring wheat, although if they had read the govern- 
ment's statement they would have seen that the government 
clearly stated that in their estimate of crop they estimated 60 
pounds to the bushel, thereby including the short weight of 
spring wheat by taking this basis, and they are trying to show 
that we are short 60,000,000 bushels of wheat for this year's 
needs. 

Now, the significance of this is that it is the surplus price that 
makes your domestic markets and the grower is entitled to 
participate along with the rest of the country. Wages have in- 



344 MARKETING AND FARM CREDITS 

creased in industrial centers steadily. Everything you buy is 
advanced by that increased wage scale, and it is right that you 
should have the benefit of those increased prices, too. 

It is a representative from New York who introduced the 
embargo bills in Congress last week. I have lived in New York 
now three years. When the war broke out I was obliged to go 
to New York to live to protect my business. My home is in 
Duluth, and I hope to return there. But while in New York I 
have studied a little bit of New York living methods, and the 
correction of New York living does not lie in laws, but it lies 
in educating the individual consumer in New York to buy in- 
telligently. Just for my own satisfaction last week I bought 
four or five sacks of gold medal flour. You know, they put 
them up in 31/^ pound sacks. It looks like a sack of salt. At 
one store I paid 35 cents for the 3^ pound sack. Down in the 
tenement quarter I bought the same sack for 20 cents. I paid 
20, 22, 24, 26 and 35 cents for the same flour exactly. 

Whose fault is it that at one place you could buy the same 
article for consumption at 60 per cent of what you would pay 
in another? Supposing the commissioner of foods in New 
York, instead of calling for all the regulation that he is asking 
for, just published in the daily paper the information that 
housekeepers could buy this standard flour at 20 cents at such 
a store, 22 at another, and 25 at another; would that correct 
this? Possibly so. The New York Globe, a short time ago, 
tried to increase the consumption of fish, selecting a list of 146 
stores in New York who agreed to sell fish subject to their in- 
spection ; The Globe had a force of inspectors, and when they 
discovered a lot of bad fish they would be taken off of the mar- 
ket. Within two weeks they were obliged to take off 40 per 
cent of that list because the owners could not see that their in- 
terests lay in selling approved fish. It is the pressure of public 
opinion calling for a certified quality that should correct that. 
You can 't do it arbitrarily. You can 't do it by law. 

High Cost of Living in Medieval Times. 

I wonder if you are interested in knowing what I ran across 
a short time ago, and which interested me immensely. It is as 



JULIUS H. BARNES 345 

to the first attempt I have been able to find of fixing prices by 
law. I think perhaps you will be interested in knowing it. 
Listen to this : 

"Who is so hardened at heart and so untouched 
by a feeling for humanity that he can be unaware, nay 
that he has not noticed, that in the sale of wares which 
are exchanged in the market, or dealt with in the daily 
business of the cities, an exorbitant tendency in prices 
has spread to such an extent that the unbridled desire 
of plundering is held in check neither by abundance 
nor by seasons of plenty!" 
It sounds like a Chicago American editorial on the meat 
trust, or the butter and egg trust. That was written in the 
year 301, 1,600 years ago by an emperor, who then attempted 
to set the prices at which everything in his domain should oper- 
ate, and he made an itemized list of almost 1,000 articles, 
and he made a penalty of death to disobey the scale which 
he fixed. Perhaps you would be interested in some of them. 
Wheat sold at 33 cents a bushel. To ask more than that was 
to suffer death. Barley at 74, rye at 45, oats 22; pork was 7 
cents a pound, and beef only 5. Butter sold at 10 cents a 
pound, river fish at 7 cents a pound. And in that connection I 
saw in Sunday's paper an advertisement of a big department 
store in New York offering fresh fish delivered at your house 
for six cents a pound. 

He fixed a labor scale. The farm laborer was to get 11 cents 
a day ; lawyer, carpenter, stone masons, blacksmiths and bakers 
(they were overpaid), 21 cents a day. The barber was to get 
9-10 of one cent for each man he shaved. A writer who did 
good writing would get for 100 lines 10 9/10 cents ; an employe 
to watch children, per child per month, 21 cents; elementary 
. teacher, per pupil per month, 21 cents. Teacher of arithmetic 
got 32 cents. An advocate or lawyer for presenting a case was 
paid $1.09. A cowhide sold for $2.17 and a sheep skin for 8 7/10 
cents. A soldier's boots were to be sold at 43 cents. Women's 
shoes were 23 cents. Under garments sold at $8.70. I presume 
most of them went without. A white bed blanket, the finest 
sort, of 12 pounds weight, was to bring $6.93, while genuine 
purple silk per pound was to be $6.22. White wool was fixed 



346 MARKETING AND FARM CREDITS 

at 21 cents. It is most interesting to us to compare with today. 
A wage scale of 21 cents a day is now 20 times as high, while 
your fish sells for less money and beef sells for four times as 
much. The truth of the matter is that much of the cry against 
the high cost of living is more or less exaggerated and caused 
by just such unscrupulous dealers as the different men from 
whom I bought that flour at different prices ranging from 20 
cents to 35 cents. 

Even while we rebel against the prices asked we ascribe it to 
the general level of the high cost of living and let it go at that. 
I remember reading this the other day. It is recorded in a 
diary among other discourses, telling about having supper with 
a number of friends at a tavern and in that diary the writer 
records "among other discourses on the spending of money and 
how much more chargeable a man's living is now than it was a 
few years ago." That was written 250 years ago, in February, 
1666. So you see we are all right in style. For 1,600 years we 
have raised this same hue and cry. Now, I don 't mean it is not 
a high public purpose to decrease every charge between the 
farmer and the consumer. I mean not to let this outcry carry 
you off your feet, because a cry becomes popular for a time. It 
is a legitimate field for real intelligent and helpful effort, but 
the remedy does not lie in such edicts as a law in Congress on 
embargoes. There is a way to be fair in these things, and the 
short cut is education. Get the knowledge to the consumer of 
where he can buy on a fair basis and to the grower where he 
can market in the fairest manner. 



HENRY KRUMREY 347 

COOPERATION IN CHEESE SALES 

Henry Krumrey * 

Four years ago last spring the milk producers of Sheboygan 
county, Wisconsin, (which county is the banner cheese pro- 
ducing county in the United States and Wisconsin is the banner 
cheese producing state in the Union, producing over one-half 
the cheese produced in the United States) rebelled, because 
they found that during the previous year their milk, which was 
made into cheese, and cheese is an article that is produced prin- 
cipally in the summer, brought them for five months in suc- 
cession less than one dollar a hundred pounds. This was less 
than two cents a quart, a price at which milk can no longer be 
produced. The milk producers around the large cities began 
to rebel about a year ago, and they rebelled because they were 
getting not any more than $1.50 a hundred. If they had rea- 
son to rebel, we had a much better reason because we were 
getting less than one dollar a hundred. Our cheese sold that 
summer during the season of greatest production as low as 11 
cents a pound. This same cheese, much of it at least, went into- 
storage and was sold the next winter when farmers have- 
very little cheese to sell, as the most and best cheese is 
produced during the summer when the cows go to pasture. 
The next thing we found was that the same cheese was be- 
ing unloaded by the packers and dealers who had stored 
it up during the summer, at a price as high as 18 to 22 cents 
a pound. So the cheese we sold as low as 11 cents a pound,, 
the speculators and packers sold as high as from 18 to 22 cents 
a pound, and this cheese when.it reached the consumer, cost 
him from 25 to 30 cents a pound. 



* Former State Senator Henry Krumrey of Plymouth, Wisconsin, 
was the principal force in organizing the Shehoygan County Cheese- 
Producers' Federation, and for three years has served his people with- 
out cost. This association has just purchased the wareliouse it had 
been renting, out of a $28,000 surplus (accumulated from the business 
done by the federation which was incorporated for $2,000, of which 
about $500 was paid in). This Federation has also changed its name- 
to the Wisconsin Cheese Producers' Federation. 



348 MARKETING AND FARM CREDITS 

Now, I believe that more of the money that the farmer gets 
of what the city consumer pays for his product, the better for 
all concerned. The more of this money he gets, the more he 
will be stimulated to produce. I am one of those who believe 
that the more money the farmer has, the more every one else 
has. There is a German saying, which you would be able to un- 
derstand if you should happen to live up in Wisconsin, espe- 
cially in that part where I do, because the great majority who 
live there are of German descent. It goes something like this : 
"Hat der Bauer Geld 
Hat es die ganze Welt." 

That means, when the farmer has money, the whole world 
has money 

Now, I believe that the farmer should get more for his cheese 
and the consumer should pay less. 

How Cheese Prices Are Made 

You have all heard of the Elgin butter board I suppose. 
What the Elgin butter board means to the butter producers of 
the country, the Plymouth cheese board means to the cheese 
producers. The price of cheese is made by the Plymouth board. 
That is, the leading cheese board of the West, fixes the price of 
cheese all over this country from Western New York to the Paci- 
fic coast and from Lake Superior to the Gulf of Mexico, but it 
does not include the State of New York. 

We found that the price usually paid in the summer was 
very low when the dealers and the packers were loading up and 
billing up their storage warehouses, and by the way I want to say 
that the big meat packers, control and market over 75 per cent 
of the Wisconsin cheese. Then in the winter when but little 
■cheese is made, the board price will be run way up, and they 
"unload. During this last summer the board price of cheese 
went as low on "Twins" as 13% cents while "Twins" are 
being produced. "Twins" are a certain kind of cheese weigh- 
ing 30 pounds apiece, two in a box, the box weighing about 60 
pounds. This winter about three weeks ago the board price on 
"Twins" went up to 26 cents, and this kind of cheese is costing 



HENRY KRUMRBY 349' 

the consumer in the large cities from 30 to 35 cents I suppose. 
The average price, as near as I can make out, that the Wis- 
consin farmers received for cheese during this last summer was 
about 16 cents I should say. Now the 26 cents board price two 
weeks ago did not do the farmers any good because they have 
very little milk at this time, and it would be better for the 
cheese industry I claim if cheese did not go as low in the 
summer and did not go as high in the winter. Both the con- 
sumer and the producer would be benefited. 

Manipulating Board Prices of Cheese 

Now, the boards are only f:or establishing the price. Very 
little, less than one-tenth of the cheese, is sold by the boards. 
The rest is contracted for outside subject to this board rate. 
Now I claim that a 13 cent board price in the summer and a 
26 cent board price in the winter is the result of manipulation, 
and I will say that this is done in order that both the producer 
and the consumer can be fleeced. A 26 cent board price at the 
present time, which it was at least two weeks ago, is a detriment 
to the cheese industry for this reason: In the first place, as I 
told you before, very little cheese is produced in the winter. 
"When cheese gets up to 26 cents wholesale, it costs the consumer 
in the city, as I said before, from 30 to 35 cents a pound. It 
has gone so high many consumers will stop eating cheese and 
get out of the habit, because when it goes down to 20 cents, it 
would be a long while before they begin eating cheese again. 

We farmers are interested in having this cheese that is in 
storage eaten up before we begin making cheese again. We 
want the stocks cleared up. We want people to eat it up so 
when we begin producing cheese next spring, there will be a 
market for it and a better market for it. 

I have not time in the brief period to go over the story of 
the organization of the Sheboygan County Cheese Producers' 
Federation. Out on the table near the desk you will find some 
pamphlets of the story of this fight as it appeared in La 
Follette's Magazine last year. You will also find a story of 
this agitation up there as it appeared in The Country Gentle- 
man, written by James H. Collins, a regular contributor for the 



350 MARKETING AND FARM CREDITS 

Saturday Evening Post, which gives the story and a statement 
of the amount of business that our federation did. 

We organized up there after this agitation was started the 
Sheboygan County Cheese Producers' Federation, an organiz- 
ation of over 1,000 farmers and 45 cheese factories, with an 
output during the flush season of over one million and a quar- 
ter pounds of cheese per month which we are selling. We own 
our warehouse and storage costing $25,000, and when the whole- 
sale grocer pays us, we will say 24^ cents per pound of cheese, 
that is f. 0. b. Plymouth, over 24 cents of that now goes to the 
producer. 

Farmer Control of Cheese Prices Will Aid Consumers 

But the trouble is right here: We do not control enough 
■of the output of Wisconsin cheese. I believe it would be better 
for the producer and consumer both, if instead of the big 
packers controlling the market on cheese the farmers would 
get control of it, and we are now branching out and attempting 
to organize more farmers in order that we shall get control 
of the market or at least a good share of the product of the Wis- 
consin cheese factories. 

I claim that the waste in the marketing of the cheese has not 
been from the wholesale grocer to the consumer. The whole- 
sale grocer's price, as a rule, is not excessive nor is the re- 
tailer 's ; but the w^aste was made mostly due to the fact that 
the dealers and speculators and packers who by manipulation 
and combination Avould force the price down, fill up their stor- 
age warehouses and then in the winter unload. 

The same thing is true of other products. For instance, dur- 
ing the fall of 1915 when the farmers had hogs to sell, we got 
about six cents a pound for them. Last summer the few hogs 
w^e had were selling for eleven cents, but the city consumer was 
paying 30 cents for bacon made out of the hogs for which we 
got six cents, and the farmer was being blamed for the high 
cost of living. The high cost of living is mainly due to 
our marketing system that we have in this country under 
which the farmer only gets 50 cents of every dollar that 
the consumer pays for farin products, while in some countries 
where the farmers are thoroughly organized, they get as high 



HENRY KRUMREY 351 

as 90 cents and more. What we are after is to get more of 
this money that the city consumer' pays for our cheese. The 
more of it we get the more we will be stimulated to pro'duce 
cheese. 

I believe that is all I will say to you at this time. I will be 
glad to answer any question that may be asked regarding our 
organization up there or regarding conditions. 

Mr. Butler (of Ohio) : I am a hog feeder, and I am wonder- 
ing how a hog man is going to get all he should have a pound 
under the present conditions. 

Senator Krumrey: In Denmark I understand the farmers 
own the packing houses. There are 45 packing houses in Den- 
mark owned by the farmers. 

Mr. Butler: "We would not be able to do that here. 

Senator Krumrey: I know that is a big job, but there is 
something wrong, especially in cheese and in hogs when they 
are so much lower when the farmer has them to sell and so high 
when he has few to sell. For instance cheese at 13% cents in 
summer when cheese is being produced, and 26 cents in winter 
cannot be justified. It is the result of manipulation of the mar- 
ket. At the same time the men that were paying 26 cents for 
that cheese on the board, were selling cheese for less than that 
and delivering it way down East somewhere. That is the 
packers who have this cheese in storage were willing to pay 26 
cents for one carload if they can sell ten carloads, which they 
bought last summer even as low as 1334, for 22 cents. By run- 
ning that board price up they are able to sell it at a higher price 
than they otherwise would be able to do. 

A Voice : Would not the packers dominate the cheesepro- 
ducers ? 

Senator Krumrey: Those packers control the marketing of 
over 75 per cent of Wisconsin cheese. 

Mr. Hay thorn (Colorado) : Isn't it practical for the cheese 
producers to own their own cold storage plant and then store 
their own cheese and then have money to finance the cheese 
producers on their receipts of stored cheese? 

Senator Krumrey: Oh, yes, it is. Of course, we can do 
that, but the farmers have all been in the habit of getting their 
money for the milk that is made into cheese soon after they de- 



352 MARKETING AND FARM CREDITS 

liver the milk, and they have not got in the habit of storing it. 

Mr. Haythorn: They have got to get that habit. 

Mrs. Larson (Colorado) : I want to know is it practical 
for you to market your cheese? We have in Colorado a com- 
bination of farmers. How do you market it ? Do you market 
it direct to the wholesalers? 

Senator Krumrey: We market it direct to the wholesale 
grocers. 

Mrs. Larson: Do you have a representative in the field to 
sell cheese. 

Senator Krumrey: We go out on the road sometime during 
the year. 

Mrs. Larson: AA^hom do you mean by ''we""? You must 
have a representative farmer. 

Senator Krumrey: I call myself a farmer although I have 
now retired from the farm. AH my life until last spring I 
have lived on the farm I was born on. I sold part of it and 
I am now living in the city. I was a farmer all my life. Last 
year I had my first experience as a traveling salesman, I went 
out on the road selling cheese and I was very successful. 

Mrs. Larson: How are your expenses paid? By the cor- 
poration or association? 

Senator Krumrey: The cheese from these 45 factories is 
sold at our warehouse. We are supposed to retain one-fourth 
of a cent per pound for operating expenses. This one-fourth of a 
cent more than pays our expenses for rent, incoming freight, all 
our help and all the selling expenses. In fact, last year it 
amounted to a little less than one-fourth of a cent. 

Mr. Line : And they sell it to the retail man and then down 
the line until they reach the ultimate consumer. How are you 
going to benefit the consumer by organizing your factories the 
way you have? 

Senator Krumrey: As I told you before, I claim that the 
waste has not been from the wholesale grocer to the consumer. 
As a rule, the wholesale grocer's profit is not excessive. Since 
w^e organized nearly three years ago conditions are much better. 
They have not been able to manipulate the board price to the 
extent they did before. 



HENRY KRUMRBY 353 

Mr. Line : You depend wholly upon the organized tributary 
district to take care of your products? 

Senator Krumrey: Yes. 

Mr. Line: I live in Ft. Wayne, Indiana. 

Senator Krumrey: I have been there and sold some cheese. 

Mr. Line: You are pretty well organized. The grocers in 
the city are organized. Do you sell direct to the wholesale 
grocers ? 

Senator Krumrey: We are wholesale distributors. 

Mr. Line: You are tied up to them? 

Senator Krumrey: We are wholesale distributors. 
If we began selling the consumer, why, the wholesale grocers 
would turn us down. 



MARKETING OF PERISHABLE FARM 
PRODUCTS AND MILK. 



SOLVING KENTUCKY'S MARKET PROBLEMS 

Feed Mutchler* 

As in other states, the marketing question is hardly as acute 
as it was a year or so ago, on account of the fact that almost 
anything that any one has to sell can readily be disposed of at a 
fair price, and when such is the case our farmers are pretty well 
satisfied. I think this condition is well for the development 
of a marketing system, and the working out of its problems, 
because we will be able to get our bearings in a way that we 
have never been able to get them before. It will help us, I think, 
to see these problems with a better developed viewpoint and 
probably help us to prevent the making of certain mistakes in 
the future that we might have made if the situation had con- 
tinued to remain as acute as it was a couple of years ago. 

I note on this program that not so large an amount of time 
is given to the specific discussion of marketing problems as was 
given last year, and I think very justly so, because the large 
amount of discussion last year (as I read it from proceedings) 
concerned the fundamental principles underlying the develop- 
ment of marketing systems throughout the agricultural sections 
of the country. It is presumed that the fundamental principles 
that have been worked out during a considerable period of time 
are pretty well understood by all of us, and so I have been able 
to make myself believe that the best I could do would be to dis- 
cuss some specific problem in marketing, rather than devote the 
time to those fundamental things that probably we are all very 
well acquainted with. 

Fundamentals of Market Problems 

I desire to state as a basis for what I am going to say after- 
wards, and by way of calling your attention again to the fact, 
that there are at least two phases of any marketing problem; 

* Dr. Fred Mutchler of Lexington, Kentucky, is director of Coopera- 
tive Extension Work of Agriculture, and Home Economics for the 
State of Kentucky. 



358 MARKETING AND FARM CREDITS 

one is very closely allied to profitable and economic production, 
and the other the business side of the transaction. The first 
phase includes what we ordinarily term "economy in produc- 
tion," which is just as important a factor in the marketing of 
products as the business side. 

We are coming to understand in the State of Kentucky, that 
if we can reduce the cost of production, it will give us a larger 
margin when we come to marketing our products, and that this 
is one of the ways of helping in the solution of the marketing 
problem; we are therefore trying to reduce the cost of produc- 
tion in our state. The other phase, the business phase, the 
management side, which is possibly the most difficult one, has 
to do with organization and cooperation. 

There are two kinds of marketing organizations; one, an 
organization which presumes to handle all the problems that 
confront the farmer from a business standpoint; an organiza- 
tion which holds that every article that the farmer produces 
should be cooperatively marketed by a single organization. This 
is one of the older forms, and has been at work in the State of 
Kentucky as in all other states, and has done a very great deal 
of good work. 

The other type is that of specific organizations for specific 
crops. I think that is as simple and ordinary as I can put it. 
It means a specific organization among farmers for the market- 
ing of apples, strawberries, cantaloupes, livestock and so on, 
and I am pleased to know that in the deliberations the Federal 
Farm Loan Board have had concerning their problems, that 
they have leaned very strongly toward the idea that federal 
farm loan associations should not be organized with a number 
of other activities, but that they should be units within thetn- 
selves. This is as universal as any example I can find to 
illustrate the kind of marketing organizations that will be 
in vogue in the future, 

Kentucky Creates Division of Markets 

Like a goodly number of other states we are attempting to 
solve the marketing problem in our state by the organization 
of a division of markets in the college of agriculture in the 
University of Kentucky, and most of our work now, and all of 



FRED MUTCHLER 359 

it so far as I am officially connected with it, is going out from 
there. I want to take up a single example, and maybe an addi- 
tional one or two if I have time, but at least a single example of 
a successful marketing organization in the State of Kentucky, 
and ask you to follow me through and see. whether or not it 
illustrates the principles, those fundamental marketing princi- 
ples that we know so well and then whether it exemplifies the 
manner of an efficient organization for a single thing. "We have 
studied rather closely one specific marketing organization in 
this country; namely, the California citrus fruit growers' or- 
ganization, and we have pointed to it as being one of the suc- 
cessful ones. 

Successful Strawberry Sales System 

I call your attention now to the fact that in Warren county, 
Kentucky, about 10 years ago, was begun an organization for 
marketing strawberries; without knowing anything of the Cali- 
fornia people this association developed so that today it is prac- 
tically the same thing as the California association. I doubt 
whether the cirtus growers of California have heard of the 
Warren County Strawberry Growers' Association, and I know 
that until within the past two or three years only a very few 
of the people around Warren county ever heard or knew any- 
thing about what the California people are doing. It is an ex- 
ample of the same thing having been worked out in two different 
places in the country and practically the same conclusions and 
results reached in almost the same way, one on a very much 
larger scale, however, than the other. There may be many exam- 
ples of this sort. 

How They Started ifl Warren County 

The first thing that these people in Warren county settled 
for themselves is that old principle which we call standardiza- 
tion. They realized that this is one of the first essentials in 
marketing their product, and very soon in their work they 
decided that they must have a fine product in order to market 
it successfully. This is especially important in the case of straw- 
berries, because they have to be moved within 12 hours after 



360 MARKETING AND FARM CREDITS 

having been taken from the patch. Cold storage amounts to 
nothing for them. Therefore they grow today the finest quality 
of strawberries that are ojffiered the trade. 

In addition to growing a fine quality of strawberries they 
must have strawberries of a single variety, and I know of no 
instance in which this has shown itself in such a marked way 
as with their association. These people found this out, and as 
rapidly as possible adjusted themselves to the condition, so that 
at the present time they are planning to ship next year some 
350,000 crates of strawberries, and I am sure it will be safe 
to say that 98 per cent of the crop will be of one variety. I 
think in the solution of a problem of this kind it is absolutely 
necessary to specialize on one or two standard varieties as well 
as to specialize for a high standard in quality. This has proven 
to be a good thing for these people, because everybody in this 
country who is interested in the trade of buying strawberries at 
any time knows that during a certain season beginning possibly 
about the 20th of May and running to the 5th or 10th of June, 
he can get a carload of a certain kind of berries at Bowling 
Green, Kentucky, as good or better than any in the world, and 
that amounts to very much in the marketing of any product. It 
is just like marketing tobacco in Central Kentucky. If a man 
wants Burley tobacco he has to go there to get it, or at any rate 
he knows that he can get the best Burley tobacco that is grown, 
in that section. 

These Warren county people started from a very small begin- 
ning. Strawberries had long been grown there, and a few had 
more than they could sell on the local market, so an organization 
for shipping was started some 10 years ago. It is based on 
truly cooperative principles. There is no capital stock paid into 
the organization. They do pay a membership fee, and annual 
■dues, a small amount such as is necessary to conduct the business 
of the association, and at the close of the year, if there is any- 
thing left after all the expenses have been paid, it is prorated 
back to each individual in proportion to the amount of business 
that he has done with the association. I think they will find that 
they want to modify their plan pretty soon, so that they may 
have a small reserve fund that can be used from time to time 
along such limited lines of advertising as they may wish to do. 



FRED MUTCHLER 361 

They have now in their organization some 400 different far- 
mers, and they are absolutely loyal to the association. Whether 
they are loyal to other organizations in connection with the 
conduct of other business does not seem to make very much 
difference. They are absolutely loyal and stand absolutely and 
solidly together in the matter of marketing that single crop. 
Many of them would not be interested in the marketing of any 
other crop that is grown down there. Some of them grow tobac- 
co, and if the association begins to market both strawberries and 
tobacco, a part of them will be interested in part of the work of 
the organization and others will be interested in the other part. 
I think one of the marked features of strength in it, is the fact 
that they have one purpose only in view. They are largely a 
selling organization, although they do cooperatively buy other 
products, and they have found it to be of great value in this 
as well as selling, but it would be safe to say that over 90 per 
cent of their business is in selling rather than buying. 

Employing a Good Manager 

They have of course, a first-class business manager, and they 
pay him a salary that makes it possible for him to spend as 
much time as is needful in the conduct of the business. The 
manager has conducted the business successfully. I know that 
during the 10 years that this association has been cooperatively 
marketing its berries, while its business has increased from a 
few carloads shipped out during the first few years to 260 last 
year, there has been only one year in which they have not made 
money. Sometimes they have made larger profits than at other 
times, but it has been and will be a success so long as they con- 
tinue the organization based as it is now on good cooperative 
business principles. 

Guaranteeing the Pack 

They guarantee their products to meet the requirements and 
the standards that they have set, and they make good any loss 
to the man who buys their product. I talked with a man from 
there only recently, and he told me that last season they paid 
back to the buyers who took this fruit off their hands, $22,000. 



362 MARKETING AND FARM CREDITS 

This was paid because of the fact that they had a wet season and 
some berries became water soaked and did not get into the ear 
in the best of condition, and before they were removed were 
spoiled. It was suggestive to note how readily these people 
paid back the money they had received for fruit that was not 
up to standard. Hardly a murmur in connection with the prob- 
lem, because they realized that the future welfare of their 
product depends upon keeping their faith with the people with 
whom they were dealing. Their manager has come to have a 
personal acquaintance with most of the business men in various 
cities that buy these berries, and about all that is necessary now 
is for any one of these men whom they know to send back a letter 
saying so many crates in the car were spoiled, and he will, almost 
by return mail, receive his check for the loss. 

"Inner Essentials" of Cooperation 

That is what I call cooperation, and I am of the opinion we 
must develop that in the lives of our people in the rural com- 
munities; the attitude of mind and heart and conscience that 
will look upon the business man as his brother in these problems^ 
and work them out from the standpoint of cooperation, not only 
on the part of the farmer and his interests, but also from the 
point of view that the entire development of the community, lies. 
at the very foundation of cooperative marketing. 

You can get the constitution and by-laws for this association 
if you want it, by writing either to the Extension Service of 
the State University, Lexington, Kentucky, or to the "Warren 
County Strawberry Growers' Association, Bowling Green, Ken- 
tucky. It is a. very brief document which tells very little about 
it. The association is constructed in the main, on the good faith 
of the people, and their willingness and ability brought about by 
the educative forces that have been at work in the field there, to 
work together in the development of the community at large. 

In addition to the foregoing, last year we started a few other 
fruit growers' associations. 'We called them fruit growers' asso- 
ciations because we feel that the problem of production and 
of marketing must go hand in hand. 



FRED MUTCHLER 36^ 

Working with Mountaineers 

I call to mind now in one of the poorer sections of the state,, 
almost on the border of the mountains of Kentucky, which you 
have probably read about, there were a few farmers that had 
been growing cantaloupes for many, many years, and it was. 
generally understood that they were of the very best that came- 
to the local market. The problem of seeing whether we could 
dispose of their surplus came up for solution. These unorgan- 
ized farmers found out that after a few were sold the rest had 
to rot. We got them together, about 15 of them, and talked to 
them concerning the fundamental principles of cooperation and 
the marketing problem in connection with them. The first point 
we made with them was this: "You must allow us in the begin- 
ning to pick out a standard variety for you, and you must 
all grow that and no other, ' ' and then we pointed out the value- 
of a high standard of quality. They agreed to it. 

"You must then", we said, "agree to grow only a few acres- 
in the early years, so that your product can be handled." It is 
a growth, of course, and the smaller the beginning, the better, 
so long as there is enough to be shipped in carload lots. The 
problem of production with them they understood pretty well, 
because they had practiced the art of growing cantaloupes for 
many years. Then we told them that we would teach them how 
to crate and pack this product, and we would undertake to find 
a market for them the first year and afterwards to help them 
with all the information we could, so that they could do the 
work themselves. 

"We got Eocky Fords and there were about 40 acres grown 
cooperatively. I wish you could have seen the first ones come 
in. Our inspector who went there had to throw half of them 
out because they were bruised and bad and had all the faults 
that you know about. The people could not understand why 
those could not be shipped. It took a good while to explain- 
to them. Then, of course, they couldn't get 48 into a crate. 
"Impossible" they said, "you can't put that many cantaloupes 
into a crate. "We have tried it every possible way." But our 
man did put them in the crates and they were shipped and the 
next day when the cantaloupes came in they had procured some 
sort of springs for the wagons and had put hay and straw in- 



364 MARKETING AND FARM CREDITS 

the beds, and they were not bruised. They had learned, prob- 
ably, the very first step in cooperative marketing, and that is 
the production of a real first-class standard article. Suffice it 
to say that a few crates of those were shipped to Cincinnati 
and they telegraphed back and wanted two carloads a day. 
They were practically all sold in Lexington, Kentucky, and the 
records over there show that they brought 10 cents more per 
crate than did the California cantaloupes. 

Now the practice of cooperative marketing is started in that 
locality, because those people made good money out of their 
cantaloupes when they had never made money before, and the 
whole problem in the solution of that problem in that particular 
section is to keep production down to such an extent that the 
growers can maintain their standard of quality and rigid in- 
spection until the business grows large enough to warrant the 
services of a competent manager to conduct the business. 

Other Organizing Work 

In addition to the foregoing we are attempting the organiza- 
tion of cooperative associations for the growing and marketing 
of apples and other fruits, as well as vegetables in various sec- 
tions of the state. The dairy products problem and the poultry 
products problem have come up with us and we are working 
on them. It will take us a long time, as it will you, in your 
locality. 

We are making the attempt in the solution of the marketing 
problem in the State of Kentucky to develop organization for 
the production and marketing of certain specific crops along 
certain lines, rather than the development of single organiza- 
tions for the production and marketing of all the various crops 
that the farmer might desire to produce. 

Proper education, proper direction and proper business meth- 
ods in production and marketing, and a great deal of time and 
much patience, will, I think, ultimately work out in the State 
of Kentucky, the farmer's problems to his advantage. 



GEORGE E. PRATER 365 

SELLING MICHIGAN CERTIFIED GRAPES 

George E. Prater, Jr.* 

I am going rapidly over conditions as we have them in the 
Michigan fruit belt, touching mainly on grapes, and possibly 
upon some of the other fruits, and show some of the difficulties 
we are up against, and some we have been up against and have 
overcome. Back some 20 years ago the Michigan grape indus- 
try was small. I am speaking of the eastern Van Buren county 
belt, which is known as the Lawton-Paw Paw Belt, and at the 
present time is known as the best belt of Concord grapes in the 
world ; that is, it is known as that in Van Buren county. 

We had some 80 or 90 acres 30 years ago and 25 years ago it 
was some two or three hundred. Twenty years ago it reached 
up past a thousand. During those times we experimented with 
sales congregations of fruit growers that we could get together 
in a body, five or six of them, to load their own cars and sell to 
local, or other buyers. It fell to this organization to get to- 
gether the larger growers who produced several carloads and 
sold to the local buyers, and the smaller growers who drove into 
town and sold by the wagonload to the local buyers. "We found 
as early as 20 years ago that this method which is now largely 
used by farmers throughout the entire Union, was going to 
prove ruinous to the grape industry of our section, I will cite 
you reasons why. With the buyer, it is not a question of how 
much wall the market stand, and how much can the farmer 
realize from his crop, but how cheap can the goods be procured. 
I have supplied these sure buyers from the large central mar- 
kets, from such markets as my friend the auctioneer here has 
held out to you. 

But they were not giving distribution, because the large buy- 
ers paid good salaries to their representatives on the market; 
those buyers paid heavy hotel bills, and some of them fine poker 
debts when they left our country. All of which increased the 

* Mr. Prater is the sales manager of the Wolverine Cooperative Com- 
pany of Paw Paw, Michigan, and his thoughts are the results of actual 
experience in selling on the markets of the Nation. 



366 MARKETING AND FARM CREDITS 

jDrice to the consumer and lowered it to the farmer. This system 
<ientralized the goods in the very largest cities, necessitating re- 
shipments to the ultimate consumers via express or other meth- 
ods of transportation, which made additional and unnecessary 
expenses chargeable jointly to the producer and consumer, of 
the profit of the large handler, expenses and salary of traveling 
buyer, expenses and salary of traveling salesmen, transporta- 
tion expense for reshipments via express or otherwise. Not 
enough grapes were being consumed under this method. "We 
must dig out our grapes or dig up a better marketing method. 

When Grapes Sold Under Cost of Production 

Under these conditions, the growers in Van Buren county 
were getting only an average of about GiA cents per eight-pound 
l3asket of grapes that it was costing them 9 cents to produce. 
The average consumer in the United States was paying better 
than 28 cents each for these baskets. The trouble was that 
some one was getting too big a chunk of the melon, and the 
farmer not enough. 

Finding a Way Out 

We began to look into conditions at other points. Some of 
our New York friends had mentioned better prices and were 
insisting on them at that time, but the thing was taking a con- 
siderable amount of courage and finance. The trouble lay 
very largely with both the grower and the consumer ; they were 
not taking each other into consideration. The grower was 
thinking his product was of little value and cared very little 
how he put it up and what class of goods he gave the con- 
sumer, and of course the consumer looked upon the grower as 
the nucleus of gilt from the fact that the produce he got from 
him was not worth what it cost. It is true the grower was get- 
ting nothing like what it cost to grow the stuff, but the con- 
sumer was paying a whole lot more than it was worth. 

They were not getting a standardized product, yet they were 
paying for it two or three times, but the monej^ was going to 
pay an unholy lot of middlemen that had gotten in between the 
two. 



GEORGE E. PRATER 367 

Organmng- for "f. o. b." Sales 

We got together associations for f. o. b. selling. I might just 
as well declare myself for f. o. b. selling right now as a little 
later on. That is our method. This was not started by our 
particular organization. We are one of the younger organiza- 
tions in the belt; but one of the older associations in our belt 
started in some 18 years ago with a rubber stamp trade-mark 
and the grower's name on the basket. They had a thoroughly 
good system of inspection and put up for sale a good honest 
article ; that is, they did not put in leaves or trash or anything 
like that in the basket. Of course they put in little bunches in 
the bottom and the good ones on top. That is p^^rfectly na- 
tural, but they gave eight pounds to the basket, and the bas- 
kets were well filled with clean, edible stuff, and we gradually 
worked along up until we got withia a cent or a cent and a 
half of the New York price. They were the means of driving 
the buyers out of the market almost entirely. They got better 
than 70, I think at one time 76 per cent, of the total growers of 
the Van Buren belt affiliated with that organization, and they 
were making a fairly good showing. Their low overhead ex- 
pense and direct selling methods outpaid the cash buying sys- 
tem to such a degree that such buyers as were left saw the hand 
writing on the wall and formed other associations along similar 
lines, with possibly some little improvements. 

When Cooperation Became a Necessity 

Our organization was the last one of the five now existing to 
enter the field of cooperative marketing. Really, we were 
forced into it. Originally we were a nursery company formed 
largely from the membership of the other organization, to grow 
their grape vines, peach trees and other kinds of nursery stock 
for their planting, partly at a saving in cost but more particu- 
larly to insure correctness in variety and selection of types from 
the best strains procurable. 

In connection with this we operated a cooperative seed and 
farm supply store, including farm machinery, spraying ma- 
terials, baskets, etc., thus assuring our members quality and 
usually a saving in cost. 



368 MARKETING AND FARM CREDITS 

A Step Toward Standardization 

There came a time when our better growers, or some of them, 
at least, realize that we must standardize our product, there 
was such a variation in the quality of the fruit as grown in the 
vineyard that it was necessary to establish definite grades in or- 
der to protect the better growers and induce better cultural 
methods. That was only five years ago, and we realized that 
the rubber stamp proposition and the stock label proposition 
which any organization could secure in any quantity from the 
lithograph concerns, could also be gotten by the other fellow. 
"We must have a trade mark so distinct that it could not pos- 
sibly be confused with any other brands. "Wolverine is the 
"nickname" of our state and the horse shoe the emblem of 
good luck, so we combined the two and put them in our label 
as a trade-mark. This combination design appears on all our 
labels, whether grapes, peaches, cherries, apples or other items 
which carry a label. 

Our object in doing this and having this trade-mark reg- 
istered, was to for all time put a trademark before the buying 
public that would readily be known from any and all of the 
other trademarks or like products that might come in compe- 
tition with us. Now if anyone could ever get up a design that 
could be mistaken for ours, that is the immediate question. We 
do not think it could be done without infringement. But after 
we had the design, we had to back it up with something sub- 
stantial, or the design would be a detriment to us. 

We devised a rigid system of inspection, and a very rigid rule 
that guarantees to our purchasers that they will get their 
money back on any packages that do not prove to be abso- 
lutely as represented. 

A Lesson in Standardization 

In the first three years of our business, we had gotten our 
prices up to a par with New York. We found, in order to do 
this, we had to devise means of marketing the byproducts. 
Now, in the growing of grapes or any fruit, you are bound to 
have lots of stuff that is not strictly a table article, qualities 
that do not readily appeal to the eye. Up until this time the 
grapes grown in our territory had been largely packed as I 



GEORGE E. PRATER 369 

heretofore suggested, with the smaller bunches on the bottom 
and faced up with the better ones. We cut out that practice 
and came out with a specific guarantee that there would be no 
bunches in the basket less than three inches long and no ill- 
shaped bunches in the package. This got a considerable better 
price, but in order to maintain that standard we had to ar- 
range to take care of the byproducts. 

We arranged with jell factories, wineries, etc., to use the 
smaller bunches, which are just as good for their purpose, and 
are today getting a price for this class of fruit, very near to 
the value of the ordinary grade of vine run. They are there- 
fore by no means a loss to our growers. I will just cite a dem- 
onstration I gave our growers at a meeting, for packing in- 
structions. I had talked to them as individuals with little 
general results. We brought into this meeting four picking 
trays of grapes which had been picked some 24 hours, we call 
it the Avilting process, grapes are picked in shallow trays and 
let stand a sufticient length of time to have the stems wilt and 
become pliable before packing in the small baskets, which per- 
mits them to fold compactly in the package without cracking 
where the stem and fruits join. We had one of our expert 
packers pack the fruit from these four trays into the small 
baskets, to demonstrate the weight of fruits that would be 
taken out in packing under this system. We desired to dem- 
onstrate that the culls were of no value in the table package 
and would bring a fair remuneration when sold as a byproduct. 
Our demonstration showed conclusively that the four trays 
were worth twelve cents more for the selected bunches in the 
four quart baskets alone than they would all be if we included 
the smaller bunches and made vine run grade. Yet we had 
sixteen cents worth of wine grapes, making a gain of seven cents 
per tray through standardization. 

The success of the organization was such that the third year 
we had no trouble in getting a membership -sufficient to sustain 
our nursery, cooperative store and basket departments. We 
were really compelled to take in some shippers who needed a, 
lot of education along the lines of both growing and packing. 
They were trading with us in our other mercantile interests,. 



370 MARKETING AND FARM CREDITS 

and were good valuable customers, yet a little careless about 
packing, but they promised to be good and we did our best to 
bring them up to our standards, with more or less success. 

State Aid in Quality Production 

"We could not get a sufficient amount of good local inspectors 
to keep the standard up to where we had established it and had 
some trouble through inefficient work of this kind. We no- 
ticed, instead of getting 2^ to 3 cents per package advance 
over ordinary market, we were getting barely a cent a package 
when the season closed. We were looking to form a method 
to keep the standardization where we thought it ought to be 
when our bureau of markets of Michigan wanted to test out 
a scheme for this very purpose. I do not know whether they 
wanted to test it out or we wanted them to; but we came to a 
mutual understanding that we would pay the expenses if they 
would furnish us inspectors and furnish a certificate that the 
goods were as represented, and my friend McBride's assistant, 
Mr. R, W. Ellsworth, had charge of the matter this year. 

I presume there is a large number of association managers 
in this room today from different parts of the country and I 
want to cite this fact to you. This is the first season Michigan 
grapes have taken the preference on the markets, New York al- 
ways taking the lead by a light margin. After the first six days 
of the grape business this season, there were very few discrim- 
inating markets in the United States where Michigan grapes 
were not quoted from two to three cents advance over , New 
York, and held at this difference throughout the year. It was 
standardization which brought this about and nothing else. 

I was to say something about selling Michigan certified 
grapes, but I never sold a car in my life, so I don't know any- 
thing about that. I supervised the loading of a great many 
cars of grapes last season, and sold a great many cars that 
were not certified. In fact, before the public knew what cer- 
tified grapes meant, knew that they got a certificate from the 
State of Michigan with each car, and that each, and every 
basket could be depended on to meet the demands of their most 
critical trade, certified cars had to go on regular orders. 



GEORGE E. PRATER 371 

After deliveries of certified cars, I never sold any more. They 
sold themselves. My trouble was to sell the uncertified stock. 

Conditions in Michigan are parallel to those of many 'other 
states. In order to supply our city customers throughout the 
season, we have our apple, peach, pear, cherry and other load- 
ing points from which we supply our trade, thereby enabling 
us to supply the different Michigan fruits through a long season. 
Other associations and large shippers are affiliated with us to 
gain the benefits of better distribution and the benefits of co- 
operative buying and production. 

Selling in the Small Towns 

Right here I might say we are not working the large cities. 
We sell to the large cities, provided we can make proper ar- 
rangements with one or two buyers, whereby we can control 
the competition on our brand on that market, but we have 
found in the whole that the smaller towns of say 5,000 to 
25,000 are better customers and effect real distribution through 
the fact that these markets take only small shipments when by 
express, but readily consume full carloads when placed on a 
proper price basis. 

Our sales are mainly made through market letters which go 
to practically all the carlot buyers within reach of our ship- 
ping stations. In these market letters, we list the approxi- 
mate number of cars for movement in each line of produce, for 
each day of the week for which the letter is issued, making 
this letter full of accurate news as to actual condition and 
volume of the goods being shipped. "We make this letter ac- 
curate enough and interesting enough to be read by every re- 
cipient and we gauge the market largely by the volume of in- 
quiry received daily on any given product. We have been 
very successful in this endeavor and a large percentage of the 
associations of our state, also large individual growers, have 
availed themselves of our selling service, as they could not 
afford to go to the expense of so elaborate a marketing system 
for the short season they would be on the market. 

Our agreements with each and every one of these organiza- 
tions are the same. We quote the price we are able to obtain 



372 MARKETING AND FARM CREDITS 

each morning. If the local managers are able to sell to as good 
advantage or better, all well and good, they sell. If not we are 
advised to make the sale, or handle the cars in transit, which 
we call pooling. 

Price-fixing and the Sherman Act 

Now, to get down to brass tacks, a method of price-fixing 
that will stand the test of the Sherman anti-trust law, is simply 
to tell our clients what the market will stand on certain grades 
for that day. Naturally they will not take less, the market is 
maintained and the buyer assured of securing as low a price 
as his neighbor. We never tell our clients they have got to get 
the price we advise, we merely state what we can get for them 
and let them use their own judgment in selling. 

Our efforts have shown conclusively that the price has been 
better maintained, brought better results to the grower and a 
more satisfactory season to the dealer than any previous sea- 
son in our fruit industry. There has been considerable varia- 
tion in value of the pack of the different organizations and at 
present it is impossible to price all packs the same, owing to 
this variation. What is needed, and we are working for, is 
either a joint agreement among the several associations to 
adopt uniform grades, or a state law defining definite grades 
to avoid this variation in values. We believe that state inspec- 
tion is our key to clearing this situatidn. Commission mer- 
chants who are fighting state inspection do not want the ship- 
per to have any document of this nature in his possession with 
which to enforce delivery on declining markets for f. o. b. pur- 
chases. However, the growers' interests are protected, and 
we are working on the growers' side of the fence. The sales 
are made f. o. b. and if the market declines the grower should 
not be the one to suffer the decline inasmuch as he is in no 
position to gain the advances which are fully as frequent. 
This undisputable written evidence of the condition and qual- 
ity of a car of fruit by a disinterested party is a mighty valu- 
able thing to induce the buyer to accept his purchases without 
reduction or complaint. 

I believe I have fully demonstrated the need of standardiza- 
tion and the benefits of state inspection. I am not so mu'^h 



GEORGE E. PRATER 373 

interested in grains, although we handle them. Their grades are 
pretty well established, but we need conditions whereby ap- 
ples, peaches, grapes and all other fruits grown in Michigan 
or adjoining states will be so defined as to grades that the 
buyers will know just exactly what to expect, on f. o. b. quota- 
tions, and will readily purchase with confidence. 

Giving Grocerymen Pointers in Grape Selling 

Under our sales system, all of these products can be ad- 
vantageously sold f. 0. b. and shipped to towns of 2,500 up, 
instead of going to the large cities to be redistributed via ex- 
press at additional cost to the consumer. We frequently get 
two or three grocerymen together to buy a car and save these 
extra expenses, and thereby increase consumption in their 
markets. 

I will briefly explain our system of handling individual ship- 
pers' accounts. I have here a copy of our carlot receipt book, 
from which the grower is given a receipt, which is torn out 
and given to him, leaving a carbon copy in the book for of6.ce 
record. Both the original receipt and the office copy carry a 
serial number which never appears on any other ticket. There 
is only one book used for each car, hence we have this book 
filed for future reference should it be needed. In this ticket 
there is a space for the car initial, car number, number of pack- 
ages, grade, gross weight and net weight, also remarks by in- 
spector, should there be reason for comment on the load. 

In sending out disbursements, we use the voucher check 
system. It says here in the body of the cheek, "Given for the 
following number of packages, varieties, ticket number, price 
and amount." This ticket number in the disbursement state- 
ment corresponds with the serial ticket number of the ticket 
for which it is rendered in payment, and the grower can check 
his receipts by his remittances and know exactly what each 
load brought. A carbon copy of this sales report and check is 
kept in the disbursement book and the canceled cheeks pasted 
in their proper place when received from the bank. 

I might say that our demonstration of the advisability of 
haying a disinterested inspector this year has waked things 
up in Michigan so that the grape growers are realizing its 
value. 



374 MARKETING AND FARM CREDITS 

HOW MAINE FARMERS SELL THEIR CROPS 

C. E. Embree * 

I don't think anyone can tell yon how to organize the farm- 
ers.. They organize themselves. 

In 1910 — I think I might go farther back; even go back to 
Horace Greeley's time, when he sent out the cry to New Eng- 
land, ''Go "West, young man, and grow up with the country," 
and this gathering that I see before me is the result of the 
New England boy coming into the western country. 

That cry was heeded to a very large extent by the boys and 
even girls of New England, and most all of the farmers in that 
section of the country believed that if they could own farms 
on the rich prairie ground that their fortune would be made. 
There was a time not a great many years ago, that when you 
went out into the country and went to the homes of the farm- 
ers, it was the old man and the old lady that met you at the 
door. The young man had gone to the West and, what was 
still worse, he had taken with him all of the available funds 
that the farm could afford. 

I have traveled myself throughout the greater part of the 
western country and in fact have been in every state of the 
Union and three of the provinces of Canada from Nova Scotia 
to Vancouver, and -I have yet to visit a place or a part of this 
Union but I have found the New England men scattered every- 
where. 

The result of our boys leaving home was to leave us with- 
out anyone to till the soil. In fact, there was a time when it 
was believed that the old New England farms were worn out 
and that the old dry hills could no longer be made to produce. 

But soon it dawned upon the New England man that upon 
this field was a better gold mine ; a richer gold mine than could 
be found in the western country. He discovered that the soil 



* Mr. C. E. Embree of Waterville, Maine, organized and was general 
manager of the Farmers' Union of Maine, when this address was de- 
livered. 



C. E. EMBREE 375 

of Maine would produce more potatoes, would produce two 
and three bushels to the acre to one in any other part of the 
country, with the exception of Nevada and Colorado. He dis- 
covered that he could raise more barley, more wheat, more 
oats per acre than you could, even out in the corn and wheat 
belt. 

But there were a great many drawbacks. It costs more to 
produce in the State of Maine, and soon it was discovered that 
the farmers would find it very difficult indeed under the sys- 
tem that prevailed there to bring any money out of these old 
farms after they had paid expenses. The trouble with Maine, 
the trouble with all New England, was that the system which 
prevailed there, the credit system, and the methods we have 
had of marketing the products. 

They commenced finally to think of some way whereby the 
product of the farm would be marketed to better advantage, 
and they could buy their supplies without paying such a tremen- 
dous profit to the middlemen. 

How the Movement Began in Maine 

In 1911, by invitation of the commissioner of agriculture, I 
went to Maine to see if something could be done to assist the 
famers in getting together into an organization that would be 
for their benefit. The time will not permit for me to describe 
what was done in Maine in detail, but I think that that is not 
necessary. We started in, I believe, following the plan of the 
state and national government. First, we undertook the edu- 
cational work by sending the business men out to the farmers' 
institute meetings to educate the farmers along business lines. 
The subject was generally, "The business end of farming."' 
Finally, when the time was ripe, we started in to organize. 
Our first local unit was organized at Brunswick in Cumberland 
county. Afterwards we organized another one at Waterville,. 
and at Dover, until in all we had eight of these small units 
organized in various parts of the state. Then we called a state 
wide meeting at Bancroft, and on June 25, 1912, we organized 
the central body, which is known to you all today as the Farm- 
ers ' Union of Maine. This federal bodv in some cases in other 



376 MARKETING AND FARM CREDITS 

states has been organized first, but we felt that if this organ- 
ization in the state of Maine was to be successful, that we must 
lay the foundation and put the farmer in charge, and then as 
we advanced, to form our central body, so that this same 
farmer could follow up to this central body. 

Therefore, we have today a very large board of general di- 
rectors, one for each of the locals. It was not large, of course, 
at the time that we started, because we only had eight or nine 
of those little organizations scattered through the various 
parts of the state. 

After a number of the units had been organized, we com- 
menced to think that it was pretty nearly time that we dem- 
onstrated to the farmers of Maine how to ship their product 
without shipping it through the usual medium, the potato buyer ; 
but we had no houses, no warehouses, as we call the potato 
shipping house. We shipped from the siding, but the cold 
weather sometimes was bad in North Maine. However, we 
were able to load almost every day, and the first winter we 
shipped 250 cars of potatoes to the markets and sold them suc- 
cessfully. The farmers themselves claim that they cleared a 
profit over the usual method of from $30 to $70 per car. 

Organizing- for Collective Purchase 

Soon after starting in the jobbing of the product of the farm, 
in addition to potatoes we shipped hay, apples and so forth, all 
in carload lots. We next turned our attention to the buying 
of supplies. As commercial fertilizer is a very important ar- 
ticle in Maine, we turned our attention to that. We are now, 
purchasing from outside the state each year about 200,000 tons 
of commercial fertilizer, costing the farmers about $6,000,000, 
and this $6,000,000 all goes out of the state. At that time 
the most of this commercial fertilizer was sold on what they 
call "December payment." The fertilizer will be delivered 
some time in the winter and paid for after the potato picking 
the next fall or in December. We started to sell this fertilizer 
through one of our units, and they cut the price of fertilizer in 
the state $2 per ton, which is certainly worth looking after, for 
that cut of $2 a ton saves the farmers of Maine $400,000. 



C. E. EMBREE 377 

Building a Warehouse 

The next winter or the next summer, we commenced build- 
ing potato houses or Avarehouses, and to make a long story- 
short, we have built up to the present time, during the four 
years we have been in operation, 42 of those potato houses, 
45 grain storehouses, seven grocery stores, and we have located 
in the center of the state a wholesale grain house. . 

We did not locate that grain house with the wholesale grain 
business because we desired to, but because the wholesalers 
of grain forced us into the business by refusing to sell us grain. 
They did not exactly refuse to sell it, but they, quoted the price 
so high that we were of course unable to buy. Therefore, we 
went to Waterville, and there were two men there engaged in 
the retail business, and one of them was then governor of the 
State of Maine. We prevailed upon him to turn his retail 
house into a wholesale house and act as buyer for the local 
units. That business has flourished from its start, and today 
there is starting through that house, flour, feed and grain to 
the amount of about $400,000. 

Of course these figures I have given you are small as com- 
pared with some figures of the farmers' organizations out in 
this section of the country, but they sound quite large to the 
New England man, and especially to an organization which 
has only been in existence for four years. 

At first we sold this product in Boston, and all over New 
England, and in New York City, through the medium of what 
is called their potato brokers. It is proving to be unsatisfac- 
tory, and we have organized what is known today as the Farm- 
ers' Union Distributing Company, organized under the corpo- 
ration laws of Maine to do business outside of the state. 

A Step Toward Centralization 

We have taken out potato houses in that section which we 
call our eastern division of the Maine Central Railroad (from 
Bancroft to the New Brunswick line there are 11 towns after 
we start out in the producing center), and in each of these 11 
towns, and placed them under the management of one man lo- 
cated at Mattawamkeag. 



378 MARKETING AND FARM CREDITS 

How the Sales Are Handled 

This manager is located about in the center of this division 
and takes charge of all the shipping in that section. This was 
done to eliminate waste and to make the cost of shipping less. 
Each one of these locals along that line notifies the manager 
by phone that it has so many cars to sell. Then the manager 
of this division sends a night message to the manager at Boston, 
who sells those cars to the buyers in Washington, or anywhere 
in the New England states. He notifies the manager or in 
other words sends shipping directions. These cars are shipped 
into the market on bill of lading sight draft, or arrival draft, 
and the buyers have the opportunity of inspecting the cars, 
and if they find the stock in that car up to guarantee or to the 
brand under which it is shipped, they then take up the draft 
to the total amount for which that car was sold and that is re- 
turned to the local unit, which shipped that particular car and 
then at the end of the month this Boston manager sends word 
— sends a bill to each of these locals or to the manager of this 
division for $6 per car for each car that was shipped in during 
the month. This money is used to meet the overhead expenses. 
There are no commissions whatever. The manager is on a sal- 
ary, and all the men that work for us in the market warehouse 
at Boston are on salary, and at the end of the year when we 
meet, if this money that is collected from various locals for 
disposing of goods is more than is necessary, then the board 
of directors vote to return it and turn it over into the knap- 
sack or return it in dividends to the locals in accordance with 
the number of cars that they have shipped in. 
How Locals Are Formed 

To go back to the locals, I do not know as we have any par- 
ticular plan. We simply drifted into things as we found it 
necessary, but I suppose that we are practically operating un- 
der the Rochdale system. A¥e have constructed our houses in 
all kinds of ways. Very seldom were we able to sell sufficient 
stock to build one of our potato houses, and still they are not 
an expensive proposition as compared with some of your ware- 
houses that you have erected in this western country. They 
cost $900 to $5,000 each, and most of them are erected by the 



C. B. EMBREE 379. 

farmers and stockholders coming forward and giving a note for 
say $50 and that note was handed over to the management of the 
local; which in turn placed those notes in the bank and col- 
lected the money and erected the house, and then by charging 
10 cents per barrel for potatoes for the shipping of these po- 
tatoes they were enabled to bring together sufficient money to 
take up these notes as fast as they became due. Therefore, 
each and every one of the stockholders that belonged to that 
organization upon the eastern division never bought but one 
share of stock at $10 and we finally concluded that we people 
of Maine were real high financiers. 

In buying supplies, conditions surrounding were very diffi- 
cult. We met considerable opposition, but this we did not 
take any notice of, because that is always to be expected when 
you undertake to conduct a farmers' organization. It is gen- 
erally understood in New England, that the farmer has no 
right to come out to the station and undertake to do business 
with the city or town business man. But I think the experi- 
ence we have gone through in New England this last four 
years has convinced them that even the farmer has some rights 
which they are bound to take notice of. 

Helping- the Dairymen 

In the western part of the state, or west of Waterville, is 
our dairy district. Most all of the farmers are engaged in 
dairying, and unfortunately the greater portion of the grain 
used to feed the cows is bought out in this western country. 
They discovered that in buying this grain that there was some 
five or six middlemen that stood between the locals and the 
base of supply, and since I came out to the west four weeks 
ago I have been trying to find some way whereby we can get 
directly back to the farmers' elevators and buy the kind of 
grain that we desire in the East; that is, mixed cars. It is 
quite difficult to buy mixed cars, as we sometimes have from 
10 to 12 different articles in a car. 

This map you will recognize, of course, as the map of the 
state of Maine. You will notice, in this section, at the head of 
Moose Head lake, starting at the outlet in the Moose Head 



380 MARKETING AND FARM CREDITS 

lake, you do not see any town, and perhaps you will be sur- 
prised because I have not yet talked to anyone relative to the 
state of Maine that knew that there were any virgin forests 
in that whole state, and all the way from Moose Head lake, 
which they claim is the largest body of fresh water in the United 
States entirely surrounded by the United States, and from that 
up to what we call the Alleghanies, up to this highest point in 
the United States, all is virgin forest, and it is claimed that all 
over this section the white man's foot has never trod. The 
dairy section and the potato section of the state of Maine is 
along in here (indicating on map). Here is Bangor. This 
line, which used to be the old North American-European Rail- 
road, running into Canada, into New Brunswick, runs from 
there into the St. Lawrence. All through this section from 
here to here (indicating on map) up to Fort Pent is, I sup- 
pose, and it is claimed one of the best potato countries in the 
world, and every foot of that land is valuable for agriculture. 
If you will follow me up to this section of Maine called Wash- 
ington county, and if you would undertake to wander through 
this section of the state, you would probably go into some of 
the numerous lakes which are around there. And that re- 
minds me that in 1911, the government at Washington sent a 
man to the state of Maine to make a survey of this state to 
determine where an artificial lake could.be located. He went 
direct to the governor of the state, and the governor said, "I 
don't know whether there is room in the state of Maine to 
put in another lake or not." 

Most all Maine farmers have a lake in their back door yard. 
That is the reason why you do not see any cities in this sec- 
tion, because it is full of lakes and rocks. If they pasture 
sheep in this section, you will find many cases of how they 
take sheep by the hind legs and let them down between the 
stones to get the grass. (Laughter.) 

In this next section of the state (indicating on map), if you 
will come to the coast of Maine and go up all of the rivers, — 
that is, all the navigable rivers and the bays and the inlets, it 
wdll take you almost all summer to get from one end of the 
state to the other, and when you have arrived there you will 
have traveled a little over 2,000 miles, just on the coast of 
IMaine. 



C. E. EMlBREE 381 

But I am diverging. Here is Waterville (indicating on 
map), where our wholesale house is located. All of this sec- 
tion from here (indicating on map) down to the extreme south- 
ern point in the state of Maine is practically devoted to dairj^- 
ing or general farming. 

Putting- New England's Agriculture on the Map 

• Now, I think there is so much that could be said relative to 
the work of organization in the state of Maine that it would 
be useless to try to undertake to cover it tonight, but I think 
that I have outlined it so that you will have at least ^ small 
idea of what we are accomplishing there. But before leaving 
the subject, I want to call your attention to a proposition that 
practically all of you heard of last summer or two years ago 
when they started the National Dairy Show at Springfield, Mas- 
sachusetts — probably you heard that a number of wealthy men 
in that section of the country got together and determined to 
put New England back again on the map agriculturally. 

That movement is in its infancy today. They subscribed 
$750,000. They erected permanent buildings at Springfield; 
and when the national show was held there in Springfield last 
October, it was simply meant as a spectacle to direct the at- 
tention of the people of the United States and New England. 
But it was a paying proposition, and they were able to pay 
back a good dividend on the amount of money that had been 
expended. 

These same men are now together, and are trying to raise 
a fund of a million dollars, this many dollars to be devoted to 
the organization of the farmers all over the New England 
states. It is intended to organize each New England state 
on the same plan that Maine has been organized ; that is, locals 
first, then the central body. Afterward, representatives from 
the six central bodies will organize this New England central, 
and then, I believe, after making a thorough investigation my- 
self of it, one of the results of this great Conference that has 
been held here in Chicago, will be that the National Agricul- 
tural Organization Society is going to be a real national farm- 



382 MARKETING AND FARM CREDITS 

ers' organization of the United States, and that this central 
New England organization will affiliate with that organization, 
tion. 

Now, I will call your attention again to the fact that I 
said that the foundation of this movement was laid at the 
farm, and the farmer was put in charge, not only of the lead- 
ing institutions, but the low^er ones ; and this central body has 
complete control over all. Therefore, as there are only farm- 
ers in this central body, when we organize the New England 
central, it must be farmers that organize that ; and when we 
send representatives from the New England central body to 
this national body that you have organized here, that same 
farmer who has started back in the wilderness, perhaps, will 
be up to the top, and then we will have truly a farmers' or- 
ganization from the bottom to the top, and the top to the 
iDottom. 



VICTOR K. McELHENY 383 



THE AUCTION METHOD OF SELLING FRUITS 
AND VEGETABLES 

YiCTOR K. McElheni', Jr.* 

Net returns to the grower have, not been as anticipated or 
as hoped for. The grower claims that his net returns are not 
commensurate with his toil. This has centered discussion on 
methods of marketing. Growers are. seeking the method of 
marketing their products that is the least burdensome. All 
kinds of suggestions have been made as to solving the problem 
of successfully marketing fruits and vegetables. Striking mis- 
conceptions, and much ignorance concerning trade conditions 
have been brought to light. Legislation has ben enacted in an 
attempt to better results. First, there is the Office of Markets 
and Rural Organization of the United States Department of 
Agriculture. Four states at this time have independent depart- 
ments of markets. Other states have market bureaus connected 
with state departments of agriculture and in many states there 
are marketing bureaus connected with state agricultural col- 
leges. Many believe that legislation of this kind will continue 
to be enacted until each state will have a marketing bureau 
or division in some form. The legislation already enacted in 
some of our largest states gives very broad power to the de- 
partment of markets. Coincident with the enactment of legis- 
lation there has come about patient private investigation, more 
intelligent discussion, a wider dissemination of the facts and a 
clearing up of some of the misconception in this important field. 

The Auction Method of Selling 

Never has there been so much discussion of the auction as a 
selling method for fruits and vegetables as during the past 
year. Inquiries both by letter and by personal visit have been 



*Victor K. McElheny, Jr., is president of the National Association 
of Auction Companies, New York City. 



384 MARKETING AND FARM CREDITS 

received "by the large auction companies from all directions. I 
shall discuss with you the auction, the place it holds in the 
marketing of fruits and vegetables and its possibilities of ex- 
tension to the benefit of the growers. 

Position of the Auction in Marketing Fruit and Produce 

You are interested in the subject under discussion in its bear- 
ing on domestic grown fruits and vegetables, but in order to 
grasp the situation more fully it will be helpful to state very 
briefly what commodities are sold at auction abroad before 
stating what are sold in this country. 

In England, France and Germany auctions of fruits and 
vegetables are very important. The four most important mar- 
kets are London, Liverpool, Hamburg and Glasgow. The fol- 
lowing commodities are there disposed of at auction: 

Fruits: In Glasgow 90 per cent of all varieties 
whether foreign or home grown. 
In Hamburg all foreign fruits. 
In Loudon 80 per cent of all foreign fruits. 
In Liverpool all foreign apples, grapes and oranges. 
Vegetables: In Glasgow foreign vegetables, princi- 
pally from Holland. 

In Hamburg foreign vegetables. 
In Liverpol foreign melons, tomatoes, potatoes and 
onions. 

In London foreign vegetables. 

Floivers and Plants : In Glasgow nearly all varieties. 
In London both plants and cut flowers. 
These sales are very important. To emphasize their 
importance I call to your attention that England's 
oversea importations of. fruits and vegetables are 
greatly in excess of its home production. 
In this country about $50,000,000 annually of fruits and a 
respectable quantity of vegetables are sold through the auction. 
I shall give these in some detail as I shall refer later to them. 
In the large markets such as New York the following fruits 
and vegetables are sold at auction. 

Calif ornia Deciduous: Cherries, apricots, peaches, 
plums, prunes, pears, grapes, fresh figs. 



VICTOR K. McELHENY 385 

Northwestern Deciduous: Cherries, peaches, plums, 
primes, pears, grapes, box apples in limited quantities. 

Other fruits also sold at auction in New York are: 

Colorado peaches. 

Arizona grapes and oranges. 

California oranges, tangerines, lemons and grape 
fruit. 

Florida oranges, tangerines and grape fruit. 

Bananas. 

Porto Eico pineapples, oranges and grape fruit. 

Sicilian lemons. 

Isle of Pines grape fruit. 

Jamaica grape fruit. 

Spanish onions. 

Cuban pineapples and grape fruit. 

Spanish grapes. 

Spanish and Italian chestnuts. 

Garlic in limited quantities. 

New York State apples and pears in limited quan- . 
titles. 
In the smaller markets an even greater variety is sold. Tak- 
ing Kansas City, Montreal and New Orleans as examples, prac- 
tically all varieties of fruits and vegetables are sold at auction. 

Advantages Enjoyed by Those Who Sell at Auction 

Publicity: It is an immense advantage to a grower to have his 
commodity sold in his presence and be permitted himself to 
take down the name of the buj^er and the price bid. Each sale 
is a public record which the grower can examine at any time. 
This feature eliminates at one stroke all complaints about im- 
proper returns. The grower knows that he will have returned 
to him all his goods sell for and on every sale. It gives the 
grower peace of mind which is an asset in any in'dustry. And 
the greater an industry becomes the more the necessity for this 
publicity. Publicity as to the price paid is an important factor 
in keeping down the profit of the buyer. Where for example, 
the buyer is a jobber, the retailer who buys from the jobber 
can inform himself as to what the jobber has paid at auction 
and with this knowledge can decline to pay the jobber an 



386 MARKETING AND FARM CREDITS 

exorbitant profit. Tliis result actually takes place. Likewise 
the consumer can readily keep informed as to what the auction 
article sells for at wholesale and knowledge can be made an 
important regulator of prices. All other things being equal, 
the one feature of publicity should merit for the auction s^^stem 
the serious consideration of all growers. 

Competitive Bidding: Another advantage in competitive bid- 
ding. By this means the grower secures the market value of 
his goods. The experienced auctioneer kuow^s the buyer, know^s 
what buyers deal in the same grades of fruit and with this 
competition, open and fair the buyer must pay all that he 
can and still leave for himself a fair profit. And by this 
method the buyer will not reap an undue profit by reason of 
the publicity given as to what he pays. The buyers like the 
method. They are not carrying on their business in the dark. 
They know what their competitor is paying and with their cost 
of goods yevy nearly the same there results a keen business 
race to distribute the purchases. 

Facilitates Distrihution: In perishable commodities, in semi- 
perishable and very often in other commodities it is an immense 
advantage to the grower to have his goods go into consumption 
as speedily as possible. Auction is par excellence in accom- 
plishing this. Auction concentrates the sellers, the buyers 
and the commodity at one point at one time. For example, in 
New York at times 75 carloads of California oranges or 100 
carloads of California small fruits are sold in one day. The 
buyers, the sellers and the commodity are concentrated at one 
place at one time. Remember there is represented in such 
sales a large variety of fi'uits of various qualities and sizes 
and a large number of growers. 

Now just picture for yourself several hundred buyers going 
to several stores to buy that fruit, if it were sold at private 
sale. Remeiijber that delay means waste. Remember that loss 
of time by the buyer means waste. The buyer's time is money. 
And who pays for this waste? The grower! The growler too 
often fails to put any importance on waste of time. It does not 
appeal to him as does a wasted box of fruit. If a grower sees a 
w^asted package of fruit he has something tangible upon which 
to estimate a loss. lie may estimate a loss of say 50 cents or 



VICTOR K. McELHENY 387 

$1 per package. But loss of time by the buyer is intangible and 
something which the grower fails to appreciate although the 
loss in the aggregate may be considerable. 

Belief of a Glutted Market: The auction can relieve a glutted 
market as no other medium can. Just as soon as the market 
sags the representatives of the peddlers and the push-cart men 
at the auction buy heavily. With all the push-carts and ped- 
dler's wagons featuring a commodity, many not handling any- 
thing else for the time being, vast quantities of fruit can be 
disposed of in case of a glut. The result is that consumption 
is greatly increased. The glut is relieved, prices rebound and 
tiie market becomes normal. 

Full Market Value ^Yllen the Demand Is Strong: Thisi was 
pointedly illustrated in New York this past summer. In the 
month of July, 1916, there w^ere sold at auction in New York 
192,115 boxes of Bartlett pears at an average of $2.28 per box 
as compared with 94,565 boxes in the month of July, 1915, at an 
average of $1.92 per box. Likewise in the -month of August, 
1916, there was sold at auction in New York 278,125 boxes of 
Bartlett Pears at an average of $2,89 per box as compared 
with 235,726 boxes in the month of August, 1915, at an average 
of $1.62 per box. On June 16, 1916, a car of San Jose, Cali- 
fornia, cherries sold for a gross of $5,400, while a year ago 
a similar shipment sold for $2,000 per car less. Similar illus- 
trations could be multiplied indefinitely. 

Full Market Value for Both High-Class and Inferior Grades: 
A relic of ignorance and prejudice on the subject of public sale 
as a means of distribution is the feeling held by some of the 
less informed that the auction might sacrifice high-class fruit. 
Nothing could be further from the facts. There are present 
at each sale representatives of fine fruiterers and high class 
grocery houses, brokers representing high class hotels, restau- 
rants and retail houses and jobbers who specialize in high grade 
fruits, all interested in high class fruit only. The result is 
that these fruits are bid up to the highest price that the market 
will warrant. In fact prices are realized at times for high 
grades of oranges, grape fruit, Spanish grapes, lemons, pears, 
California grapes, plums and cherries sold at Auction that 
could be secured in no other way. Furthermore the auction 



388 MARKETING AND FARM CREDITS 

is the keenest discriminator between the fruit of the careful 
grower and packer and that of the careless. Every grower 
and packer who uses intelligence, time and care in the produc- 
tion and packing of his fruit wants these elements recognized. 
No system equals the auction in recognizing what is good and 
in paying for it accordingly. The auction is the place above 
all where each grower's effort stands on its own merit. 

Equality of Large and Small Growers: At the auction the only 
inequality is that of the quality and condition of the commodity 
offered. No seller receives more money because he is a large 
and influential grower and no grower receives less because his 
offering is too modest. Each man's fruit sells on its merit. 
It is not the man the buyer has in mind when he bids but the 
quality and condition of the commodity. 

Widening of Distribution: Does the auction distribute a 
greater quantity of a commodity than private sale? We are 
confident that it does but we have not at hand the data to dem- 
onstrate this matter in a conclusive way. "We are endeavoring 
to collect data on this subject in which all conditions are sub- 
stantially similar. Bearing on this question we can say the 
following: "We are confident auction increases the number 
of buyers of a commodity. In New York the auction buyers 
are as follows : 

Wholesale grocers, 

Chain stores, 

Peddlers, 

Hotels, 

Ketailers, 

Large Restaurants, 

Fancy fruiterers. 

Push carts. 

Jobbers. 
The percentage of fruit each Tduvs is approximately the 
following : 

Wholesale grocer 5 per cent (Almeria grapes 20 per cent, 
lemons 20 per cent) ; chain stores 10 per cent ; peddlers 10 per 
cent (California deciduous 20 per cent) ; hotels, large restau- 
rants 5 per cent; retailer 15 per cent; push carts 5 per cent; 
jobbers 40 per cent ; fancy fruiterers 10 per cent. 



VICTOR K. McELHBNY 



389 




390 MARKETING AND FARM CREDITS 

A recent concrete example of the way auction sale of fruit 
increases the number of buyers and thereby widens distribu- 
tion is the sale of bananas at public auction in the cities of 
New York and Baltimore. The company importing the largest 
amount of bananas changed from private sale to public sale 
in New York City April, 1913, and in Baltimore July 1, 1914, 
with the result that the number of buyers increased nearly 
tenfold. It has happened that in a single year in some auction 
cities sales of California deciduous fruits have increased 30 
per cent, and in a period of five years 100 per cent when Cali- 
fornia had a heavy crop ; and the auction has been sufficiently 
fiexible to take care of and distribute satisfactorily the in- 
creased crop. Similarly sales at auction of Florida oranges 
in Boston have in a period of five years increased 200 per cent. 

California deciduous growers, by reason of dissatisfaction 
with private selling, turned to the auction 28 years ago when 
their crop was 1,000 cars annually. Today their crop is 17,000 
cars annually. No selling system other than the auction could 
handle that large crop in large cities. 

The large number of buyers that deal exclusively in commod- 
ities sold at auction being assured of a source of supply at 
auction would welcome the opportunity to add other commod- 
ities to the list already dealt in. In addition buyers who deal 
in commodities not sold at auction would follow those com- 
modities into the auction. 

An important factor bearing on this matter of a wider dis- 
tribution is the fact that the auction price is public. The 
retailer thereby knows that the true market price is established 
by the auction. That knowledge keeps dowm the jobber's 
profit and this aids distribution. A wade distribution aids the 
grower. I will refer to this more in detail later on in dealing 
with the methods of the Avholesale house as compared with the 
auction. 

The Auction Bemits the Proceeds of the Sale the Day After 
the Sale: 

The auction sells to the buyers on credit. In New York City 
the terms of credit given to buyers are 10, 15 and 30 days 
respectively, depending upon the variety of fruit sold. How- 
ever, the auction discounts the sale and guarantees the seller 



VICTOR K. McELHENY 391 

against any loss arising from the insolvency of the buyer and 
therefore within 24 hours of the sale sends to the seller an 
''Account Sales" together with a check for the amount of the 
sale less the auction commission. 

Also the expense of selling goods shipped in carlots is sub- 
stantially less at auction than by other methods. 

Shortest Wholesale Route From Producer to Consumer 

. Students of marketing recognize that only an infinitesimal 
amount of the grower's production can be marketed by him 
direct to the consumer. Such marketing can in the aggregate 
help either the grower or the consumer but very little. It is 
universally conceded that some method of wholesale distribu-" 
tion is essential for efficient distribution. In order to demon- 
strate the possibilities of the auction as a method of wholesale 
distribution between the grower and the consumer, I again 
call to your attention the number of classes of buyers in the 
New York market, as I have already pointed them out and 
I also call your attention to the diagram setting out the present 
position of auction in the channel of distribution. Taking, for 
example, the cooperative organization of growers and its agent 
in the auction market as one; or taking the shipping corpora- 
tion and its agent in the auction market as one we have the 
following steps between the grower and the consumer: 

(a) Grower. 

(b) Cooperative organization of growers or shipping 
corporation. 

(c) Auction (wholesale). 

(d) Retailer, large restaurant, fancy fruiterers, 
hotels, etc. 

(e) Consumer. 

There is in the foregoing, one wholesale unit in the large 
market that performs its functions Avith a minimum burden both 
to the producer and the consumer. I point out the foregoing 
to show the possibilities of the auction. No other present 
method of wholesale marketing in large cities is as efficient 
as the auction, or occupies a position so close both to producer 
and consumer. The large cost of marketing is to be found in 



392 MARKETING AND FARM CREDITS 

the marketing- units under subdivision (d). I do not mean to 
state that the units under subdivision (d) charge exorbitantly 
for the service demanded from them by the consumer. I merely 
state the fact that the largest cost of marketing is to be found 
connected with the units under subdivision (d). The possi- 
bilities of the auction as an efficient wholesale method of dis- 
tribution as I have herein pointed out, and the large cost of 
marketing of the units under subdivision (d) were fully recog- 
nized by the report of the committee on markets, prices and 
costs of the New York State Food Investigating Committee, 
issued under date of August 1, 1912. 

Possibilities of Extension of the Auction 
. The possibilities for the extension of the auction to other 
Jines of fruit and to vegetables are large. 

There are two classes of objectors to the sale of fruits and 
vegetables at auction. One says certain fruits or certain vege^ 
tables are too perishable. Another says a certain commodity 
is not perishable enough. Referring to the agitation for selling 
-cantaloupes at auction one private seller wrote that it could 
not be done because they are too much alike. It may be some- 
one can tell me what he had in mind. In reply to the objec- 
tions just mentioned let me say that all fruits and vegetables 
are now being sold at auction successfully, either here or 
abroad, whether they are perishable, semi-perishable or other- 
wise. It is no experiment. The fact that these commodities are 
sold in the large foreign markets and in certain domestic mar- 
kets show that it can be done, and that there is nothing in the 
perishability or lack of perishability of the commodity to pre- 
vent its being an auction commodity. It is simply a waste of 
time to take up each variety of fruit and vegetable not sold 
at auction in this country and discuss as to whether or not it 
can be sold publicly instead of privately. The question is not 
as to whether a certain line of fruit or vegetable can be sold 
at auction but whether it is an advantage to do so, and what 
are the practical difficulties in the way. A private seller will 
tell you that boxed apples, barreled apples, Georgia peaches. 
New York State peaches, etc., cannot be sold at auction, and 
yet millions of boxes and barrels of apples shipped from the 
United States are sold annually abroad, and California peaches 



VICTOR K. McELHEiNY 393 

are successfully sold at auction in this country in the large 
markets. The question of the perishability or the lack of 
perishability of the article has no bearing on the question as 
to whether it can or can not be sold at auction. In passing 
permit me to say that I doubt whether there is anything more 
perishable than California fresh figs and yet they are sold 
successfully at auction and no thought given to that phase 
of the subject. 

Sellings California Fruits 

Bearing on this question as to what extent the auction may 
be extended to other fruits and to vegetables, I will first point 
out the characteristics of the commodities now sold at auction. 
Let us take the domestic grown commodities sold at auction in 
the large markets of this country and let us take the outstand- 
ing characteristics of these commodities. Let us take Califor- 
nia fruits as an example : 

1. We have a constant supply at the auction. 

2. They come in carlots. 

3. They are well graded, well packed and in uni- 
form packages. 

4. While they come in carlots still these carlots are 
in many instances made up of the shipments of vari- 
ous growers. 

Those are the chief characteristics of domestic commodities 
sold at auction in the large markets. Now, what are the essen- 
tials of an auction commodity? 

I have given you three prominent characteristics of Cali- 
fornia commodities sold at auction. In my judgment there is 
one essential and that is a constant supply in order to attract 
the buyers. No arbitrary percentage of the total sales of a 
commodity in a market can be named as necessary in order 
to make the auction a success. In years of a full crop the 
auction should be supplied with a fair share of the commodity 
sold in a market. The same percentage of the total offering 
of a commodity in a market is not so essential in years of a 
«hort crop, or in a case where, for example, vegetables come 
into northern markets in the winter time or early spring such 
^s is the case with Cuban vegetables. 



394 MARKETING AND FARM CREDITS 

I do not minimize the desirability and importance of having' 
the commodity come in carlots, well graded, well packed and 
in standardized packages. It will greatly assist the auction, 
reduce the expense of handling and increase the grower's re- 
turns to have commodities come in that wsij, but it is not 
essential. 

With what I have now just said in mind, consider the num- 
ber of commodities not now sold at auction, which now possess 
all the characteristics of the California commodities so suc- 
cessfully sold at auction. 

Practical Difficulties in Turning New Lines to the Auction 

As I have pointed out the auction is susceptible of a large 
extension. There are many lines of domestic-grown fruits and 
vegetables that now have the same characteristics pointed out 
with respect to California fruits so successfully sold at auction. 
Each year there will be other varieties that will take on these 
characteristics. Why are these not now sold at auction in the 
large markets? 

Before stating the practical difficulties in turning new lines, 
to the auction let me point out that 50 per cent of the fruits 
now sold at auction in this country are grown in California 
and Florida. Also let me further point out that of the domestic 
grown fruits sold at auction the largest percentage of the 
auction offerings from these two states comes from California. 
That fact is food for thought. Why is that? Certainly promi- 
nent among the reasons is that the California grower w^as under 
the necessity, if he intended to use the far eastern markets, to 
adopt the very best marketing agency. He had the freight rate 
against him, also refrigerating charges. Also he was 3,000' 
miles away from New York, Boston and Philadelphia. He had 
to live out of the proceeds of the sale of his fruit. This com- 
pelled the California growers to get together. And this com- 
pelled them also to adopt the most advantageous plan of mar- 
keting. They sent a committee east to investigate and in the 
face of opposition exactly similar to the opposition to the 
extension of the auction today the Californians adopted the 
auction. It is a wonderful tribute to the auction that the 



VICTOR K. McELHEiNY 395 

growers under the greatest necessity adopted it. Why not 
other lines? 

In my judgment one of the strongest reasons that more com- 
modities are not now sold at auction is the present organization 
of the business of marketing. Business is in fixed lines. "We 
have commission men, the wholesaler and the man that com- 
bines both functions. The longer business is conducted in a 
certain groove the more difficult it is to change. Capital has 
become invested. The wholesaler and commission man either 
by purchases or advances finances the grower. Thereby he 
controls the grower's business. The grower is not a free agent. 
Each year these interests become harder to dislodge with the 
result that until the growers can work in unison as free agents 
it becomes increasingly difficult to change present business 
methods. 

In the second place the auction has done no financing except 
paying the proceeds of the sale the day after the sale. It has 
not believed in advancing before the sale. This method is 
expensive and the solvent grower must pay in the end the 
losses made through unwise advances. The grower selling at 
auction can leave any day. The auction in no way limits his- 
freedoTn of action. 

In the third place many growers have been educated to f. o. b. 
selling. Lack of capital has made that a necessity for them.. 
Further, many so abhor shipping to be sold privately on com- 
mission that it is difficult to make them consider any method 
other than f. o. b. selling. 

In the fourth place prejudice and ignorance of the auction 
have hampered the auction. Whenever the word "auction" 
has appeared it has suggested to some a red flag — a man 
standing on a counter or chair yelling at the top of his voice 
and knocking down under the hammer whatever by way of 
rubbish happened to be at hand. With regard to the auction 
sales of fruit as conducted by the large auction companies, 
the picture is so entirely different that it is hard to make a . 
comparison. Fostering this prejudice every commission man 
and every wholesaler is a foe of the auction. You, therefore, 
have hundreds of active agents talking against the auction all 
over the country. In my judgment much of this opposition is 



396 MARKETING AND FARM CREDITS 

unnecessary and short sighted. I believe that there is enough 
business both for the first class commission man and the auc- 
tion. I further believe that the auction can be an advantage 
to the commission man in helping him to increase his business 
by reason of the fact that the auction furnishes the capital 
by paying the proceeds of the sale the day after the sale. 

Another thing bearing on the difficulties of turning new 
lines into the auction is that further east where these is less 
unity among growers the private seller is in closer touch with 
the grower and can the more easily foster his own business 
and foster opposition to the auction. 

Anotiier reason why more commodities are not now sold at 
auction is the trade limitation of the auction itself in the large 
markets. The auctions do not receive commodities direct. 
Excepting the case where a cooperative organization of grow- 
ers or the shipping corporation has its own agent in a market 
the auctions seiU for auction receivers who represent the grow- 
ers or they sell for commission men who sell at auction com- 
modities customarily thus sold. The result is the auction can- 
not efficiently solicit new business. The auction therefore in the 
main sells merely commodities that come to it unsolicited. 

Turning' New Lines to the Auction 

I have just stated the difficulties that surround an extension 
of the auction. What is the solution of these difficulties that 
hedge in a greater use of the auction? The movement to over- 
come those difficulties must start with the growers. They must 
join hands. They must cooperate. There must be unity of 
action in shipping either through a cooperative organization or 
a shipping corporation or otherwise in order to offer auction 
buyers a constant supply. They must see the compelling 
necessity an(J then act as the California growers did. In order 
to get to the auction there need not necessarily be any highly 
organized cooperation like the California Fruit Growers' Ex- 
change. That could come as a growth, if desired. I mean 
merely unity in shipping to a market to be sold at auction. 
That unity must be sufficient to give a constant supply. They 
can ship individually preferably joining together in car lots, 
preferably in uniform packages, but the main thing is to ship 



VICTOR K. McELHEiNY 397 

to one place to be sold at auction. Let the commodity be 
concentrated in one place with a determination (after a knowl- 
edge of all the facts and being convinced that they are doing 
the best thing) to sell at auction until some better method 
presents itself. It is the growler's problem which cannot be 
shifted to the auction. 

Another possible solution is that in respect to new lines the 
auctions buy f . o. b. and sell their purchases at auction. In that 
way it could be said the auction could give a demonstration of 
its efficiency. Such a solution, however, would not give the 
full benefit of the auction to the grower, one important feature 
being that the profit from the buying would not go to the 
grower but to the auction. A factor not to be overlooked at 
this point is that buying means the expense of another organi- 
zation, also losses at times and in the end the growers must 
stand all these. Another important result of this plan would 
be that it would make the auction interested in what it sells 
and this the auction endeavors to avoid. 

Another suggested solution is that the auctions make ad- 
vances to the growers and thus finance the growler like the 
private seller. This is open to the objection that it is expensive 
and the grower must pay the expense of maintaining the ma- 
chinery including the losses made by careless or unwise ad- 
vances. 

A further suggested solution is that the auctions cast aside 
their conservatism and become direct receivers, putting solici- 
tors in the field and thus meeting the auction's competitors on 
an equal footing. 

Auction Method Versus Present Organization of Wholesale 
sale Business of Marketing Fruits and Vegetables 

A forcible way of bringing the advantages of the auction 
method concretely to the mind is that of comparison. 

Taking the New York market as an example, the business 
units handling fruits and vegetables in a wholesale way are 
the following: 

(a) Commission house. 

(b) Wholesale house. 

(c) Wholesale-commission house. 



398 MARKETING AND FARM CREDITS 

That is the house that combines the functions of the 
first two mentioned. This house will either handle 
the commidity on commission solely or buy the com- 
modity. In certain respects its duties are antagonistic. 

(d) Wholesale-jobbing house. 

(e) Auction house. 

So far as the grower is concerned the wholesale house, the 
"wholesale-commission house and the wholesale-jobber can be 
treated as one. So that from the grower's standpoint we in 
reality have in the large markets the following units handling 
fruits and vegetables at wholesale : 
The. commission house. 
The wholesale house. 
The auction house. 
Now contrast the method of doing business of the first two 
^th the auction method. 

The Commission House Method 

In the first place no record is kept available to the seller. 
This is a serious handicap. The greater the production of a 
commodity the greater the necessity for complete publicity. 
The grower is far distant. He needs a public method more than 
were he at hand. He needs the peace of mind about the selling 
of his commodity that the commission house cannot give. In 
the next place the buyers are scattered. There is not the con- 
centration desirable. This leads to a waste of time. For ex- 
ample, suppose half a dozen commission houses are handling 
a portion of a crop a buyer must necessarily go to several 
houses before purchasing in order to determine the market. 
Commission houses cannot handle a large crop as expeditiously 
as is usually needed. Also buyers at private sale negotiate 
singly, each buyer as it were taking his turn. That takes time. 
Loss of time as I have pointed out is waste which the grower 
must pay. The commission house always necessarily has unde- 
sirable sizes and grades of the commodity which a particular 
buyer may not want but the buyer is oft times induced to take 
them by securing lower prices on desirable grades and sizes 
even though the good grades are shipped by a grower other 
than the one that shipped the poor grades. Growers careful 



VICTOR K. McELHENY 399 

as to grades and sizes will suffer under sales, of this kind. 
Another important item is that the commission house does not 
have any standard as compared to the auction by which to 
tell the market price. An illustration of this is shown where 
a variety of fruit is sold both at auction and privately. In such 
cases the auction price governs and the private seller waits until 
the auction is over and makes his price according to the auction 
standard of prices. The auction price is recognized as the 
market price. The consensus of opinion among growers is that 
sales on commission at private sale are not satisfactory. This 
has led many to advocate f. o. b. selling by the grower. I will, 
therefore, discuss this method of marketing next. 

The Wholesale House 

This house purchases from the grower f. o. b. The house 
either pays cash f. o. b. as the goods are shipped or the bill of 
lading is sent through a bank attached to a draft. The whole- 
saler claims that this method is the best way of marketing but 
let us analyze the method of this house and see if it conducts 
the ideal marketing plan. In the first place the wholesaler 
buys for a profit. He endeavors to make that profit as large as 
possible. He cannot stay in business if he does not make a 
profit. He is content to make a large profit on a minimum dis- 
tribution rather than a smaller profit on maximum sales. This 
is antagonistic to the grower's interest. Where there is mini- 
mum consumption and the wholesaler gets a large profit the 
grower receives no part of this extra large profit. The grower 
receives just as much per package if the wholesaler will sell 
more fruit at a less profit and the grower is benefited by the 
larger distribution. If the profit of the wholesaler is more than 
what a fair commission for his services for selling the commod- 
ity would be he is receiving something that belongs to the 
grower. Other important items are : before the wholesaler can 
figure a profit he must be reimbursed for his expenses and his 
losses. It is in the end the grower who must pay these impor- 
tant items. In the next place, as production becomes larger 
the buyers are fewer. The wholesale house then desires the 
goods on commission. The test of the wholesale house is in 
years of large production. To secure the best results any 



400 MARKETING AND FARM CREDITS 

method must be continuous and there is no continuity where 
the wholesale house fails when most needed, that is in years of 
large production. In the next place when the grower is paid 
by the taking up of a draft with the bill of lading attached it 
often happens that payment of the draft is refused when there 
is a decline in the market. Further, the wholesaler is under 
the same limitation of sale as the commission house, which lim- 
itation I have above described. There is the same division of 
the buyers and the same waste of time and the same waste of 
the commodity in not getting it into consumption speedily. 
While the wholesaler owns the goods still all these limitations 
affect the growers because they affect the market price. 

Now Consider the Auction Way 

1. It gives complete publicity. The seller can at- 
tend the sale and note the price paid and the buyer's 
name. He can compare these with his account sale. 
This corrects one of the chief objections to private 
sale. Publicity of the price paid keeps down the 
buyers' profit and thereby widens distribution. 

2. It gives concentration of the buyers, sellers and 
commodities in one place at one time, thereby reduc- 
ing waste of time to a minimum. 

3. It sells the commodity to the highest bidder after 
open competition, thereby producing the market 'price 
on the day of sale. 

4. It procures at the sale a maximum number of 
buyers, by reason of the concentration above referred 
to. 

5. It performs its services at a minimum expense. 

Now, let me ask, "What present method of wholesale dis- 
tribution in large cities most nearly approximates an ideal 
method?" ''What selling system is the least burden on the 
grower?" I will let you answer these questions. 

A Note of Warning 

The auction method is no cure-all. It will not make up for 
poor business methods, poor grading, poor backing, poor culti- 
vation, or for general lack of intelligence. Nor will it procure 



H. E. HORTON 401 

for the groAver more than the full market value for his com- 
modity. It will not procure the same price for fruit of poor 
quality and condition as for fruit of good quality and condi- 
tion. I am afraid it may prove a grievous disappointment to 
the shipper that nibbles at it expecting something big offhand. 
The man that cannot use it for a reasonable length of time or 
the man that insists in shipping a few packages to the auction 
and at the same time a few to a commission house in order to 
"test" the auction had better not use it. That man has not 
sufficient breadth of view to make any change of methods. 

The auction method must be taken in a serious way and in a 
way to give it a fair chance and I am confident if it be given 
fair treatment it will "make good." 



RESULTS OF AN INVESTIGATION OF 
MARKETING WHOLE MILK 

H. E. HORTON* 
"The price he is to receive is far beyond him. in the market, gov- 
erned by forces and conditions over which he has but slight, if any, 
control. But a penny saved in cost is just as good as a penny gained 
in price. . . . " — Gov. Hoard. 

Some people think the milk problem begins and ends in mar- 
keting. Nothing can be farther from the facts. Marketing is 
bound up with -production, and cannot be understood, neither 
can its problems be solved, without the most careful attention 
to the study of the cost of production. 

The sources of materials with which to study the subject are 
as follows: 

1. Annual reports, bulletins and circulars of the 
agricultural experiment stations. 

2. Reports and bulletins of state boards of agricul- 
ture. 

3. Reports of cow testing associations, issued as sep- 
arates, or published by Hoard's DairjTuan. 

* Dr. H. E. Horton of Chicago is agricultural commissioner for the 
American Steel and Wire Company. 



402 MARKETING AND FAR:M CREDITS 

4. Publications of the U, S. Department of Agricul- 
ture. 

5. Agricultural papers; the daily press, in its news 
and editorial columns, and in its advertisement sec- 
tions. 

6. Miscellaneous sources: 

State commissions. 

Chambers of commerce. (Boston Chamber of 
Commerce, Cleveland Chamber of Com- 
merce). 

Records of law cases. 

Special books and pamphlets. Larsen, C. W. : 
Milk Production Cost Accounts. Principles 
& Methods. New York, 1916.) 

Dairy Industry a Storm Center 

The dairying industry has been a storm center in the great 
social unrest, and the new line-up of economic thought, that has 
been taking place in this country in recent years. 

The daily newspapers, the agricultural papers, have had so 
much to say in chronicling the doings in the dairy industry 
that great numbers of people are thinking over the subject. All 
the modern tools of "picket", "boycott", "milk war", "in- 
junction", "refusal to deal with organized bodies", "watered 
stock", "inspired publicity", "trusts" have been effectively 
used to win and secure position. 

The increase in culture and wealth in a country has always 
found people calling for the good tasting things to eat ; among 
these milk, cream and butter have always taken prominent 
parts. 

With the increase in urban populations have come new meth- 
ods of selling and distributing, and unfortunately the broad 
vision has rarely been had: "What has posterity done for 
us?", "Am I my brother's keeper?" have been expressions of 
the spirit of the times. 

Thirty to thirty-five years ago saw either the beginnings or 
intensification of industrial life in the country: coincident 
with this, the beginning of the breakdown in system of mar- 
keting. 



H. E. HORTON 403 

The producers of milk did not awaken in the 70 's and 80 's, 
and even now they are but half awake and it remains for the 
cow testing associations to make them wide awake. 

While in the past there have been sporadic attempts on part 
of the farmers' organizations to secure better prices for milk 
only this year has the movement reached large proportions. 

Milk Wars at Large Centers 

Three large cities, Chicago, New York and Boston, have had 
milk wars, and the milk producer has won against the milk 
distributor. Cities in all parts of the country have been 
aroused over the milk question. 

It is claimed by the big distributors, the settlements are not 
settlements, and they apparently look forward to another trial 
of strength. The producers, flushed with success, did not stop 
organizing when they won, but are strengthening their associ- 
ations. 

The farmer produces milk of varying quality and not always 
clean and sanitary. The big distributor is at the same time 
the standardizer. The milk question is this : can consumer 
and producer afford to pay the distributor his price for stand- 
ardizing the product? 

. The man who is most vitally interested in the right solution 
of the milk problem is the man who does not even know there 
is such a problem. We must look into the future, beyond the 
professional dairyman, to the general farmer. The small 
farmer, with good cows, can with the cream check acquire a 
small farm, build it up and add to its size. It is not difficult 
to believe that the cream check will make possible the popula- 
ting of the now waste lands not too far removed from the rail- 
road. 

Obligations of Producers and Distributors 

Milk producers and distributors have certain obligations na- 
tural to their business, and they must not shirk them. The 
farmer is in duty bound to eliminate the "boarder" cows, to 
conform to reasonable sanitary requirements, exercise normal 
technical skill in growing feedstuffs and feeding them. Be 



404 MARKETING AND FARM CREDITS 

prepared to effectively handle excessive production of milk in 
the spring months. The distributor must not expect to pay 
dividends on excessive capitalization. He must eliminate the 
lost motion of distribution. He must deal directly with the 
producers and not through the corporation's attorney. 

The controversies between producer and distributor should 
be handled as though they were cases in the equity courts where 
litigants come into court with clean hands. 

The farmer will only produce milk when its production yields 
him a profit. 

To the scientific crusade for sanitary milk, in many instances 
carried to extreme lengths, may be traced the reduced produc- 
tion of milk and the lessened numbers of dairy animals on the 
farm. "Regulations" have enabled the far-sighted distributors 
to establish a business on the shortcomings of the farmer and 
at his and the consumer's expense. 

High cost of cattle feeds are playing a big part in the pro- 
duction of milk. Lack of interest in cow testing associations 
is another important item, for without the association the 
farmer is likely to carry boarder cows in his herd. 

Another source of weakness on the part of the producer is 
his unwillingness to adopt diversified farming with its demand 
for technical training in crop growing and animal feeding. 

On the part of everybody there has been a great deal of loose 
thinking and more loose talking on the subject of the cost of 
milk production and marketing, and before the problem of re- 
adjustment may be approached and studied intelligently the 
cost sheet must find a place on the farm, for the farmer is no 
exception to the rule that requires strict accounting. 

The years 1915 and 1916 saw many attempts, in all parts of 
the country, to use strong arm tactics to bring about a change 
in marketing. 

Chicago had its ' ' milk war " or " strike. ' ' The farmers stood 
for being organized, and this with a minimum of trouble, and 
the big distributors were obliged to grant the increase price 
demanded for milk. 



H. E. HORTON 405 

The New York Milk War 

Th,e Dairymen's League of New York State originated in 
Orange county, New York, and was incorporated in 1907, in 
New Jersey, with a capital stock of $1,000,000. From the date 
of its incorporation on to 1916 it passed a checkered existence. 

In 1916 the league had 13,000 members, with 190,000 cows. 
On August 28, 1916, the league held the most important meet- 
ing in its history, when it decided to make the New York State 
Department of Foods and ]\Iarkets its exclusive agent for the 
sale of milk. The time for starting on this contract was placed 
for October 1, 1916, and the contract was to run to March 31, 
1917. The dairymen decided on the follomng schedule of milk 
prices : 

October $2.17 per 100 pounds 

November 2.27 per 100 pounds 

December 2.27 per 100 pounds 

January 2.17 per 100 pounds 

February 2.12 per 100 pounds 

March 2.07 per 100 pounds 

These prices were to govern in the First Freight Zone for 
grade "B" milk, containing three per cent butter fat. 

The New York milk dealers met this move of the producers 
by arranging for a supply of milk from other territories, — 
Pennsylvania and New England, and even drawing from Chi- 
cago. In this move they were unsuccessful and the supply of 
milk fell rapidly. 

In the name of "Sanitation" the New York laws prescribed 
the kind of milk that may be handled in the market and it was 
thought by the dealers that the machinery and apparatus neces- 
sary for such liandling was in their own hands. The dealers 
were surprised to find league milk, conforming to the law 
being sold to the consumer without advancing the price and this 
while paying the producer the agreed schedule price. 

The contest rapidly entered the phase of high feelings; ad- 
vice of lawyers, attempts at private settlement, yes treachery — 
and all these were met with a solid front by the league and the 
Department of Foods and Markets. 

This acute phase was followed by some small dealers wishing 



406 MARKETING AND FARM CREDITS 

to meet the league schedule and it was not long before 12 
big dealers, controlling 65 per cent of the trade, agreed to the 
schedule. This practically ended the war, although several of 
the big dealers would not agree to the schedule. 

The Boston Milk War 

The New England Milk Producers' Association opened head- 
quarters at the Quincy House, Boston, on September 28, 1916, 
the office being in charge of President Colby and Secretary R. 
Pattee, to fight for higher prices for milk. The distributors 
were standing pat and claiming to have signed contracts for all 
the milk they wanted at their price. 

The association adopted a novel, and potent, means of pub- 
licity by issuing an organ known as the "New England Milk 
Bulletin": this was made possible by the cooperation of the 
"New England Homestead." 

Number I., Volume I., appeared October 2, 1916, and twenty- 
six numbers of this very interesting publication were issued 
and distributed to farmers in Massachusetts, Connecticut, 
Maine, New Hampshire and Vermont. 

The fight was the same old story of earnest determined, 
farmers fighting hard for their rights, — a living and reason- 
able, profitable price for their produce. 

It would seem their opponents would never learn. They had 
no vision, no initiative; they played their game with the same 
old weapons and in the same old way, that can never win. 

Friday, November 11, 1916, the fight was over; the farmers- 
had won a schedule that promised them fair compensation for 
their efforts. 

Briefly, what remains to be done by both sides, — the milk 
producer, and the milk distributor? Both sides should come 
into court with clean hands and with the determination to settle 
the business as between business men. 

Dr. Horton's Solution 

There are a number of things for the farmer to do and I will 
enumerate them with a few brief comments : 



H. E. HORTON 407 

1. Farmers should be members of cow testing as- 
sociations and eliminate the ''boarder" cows in the 
herd. Massachusetts, which fought so stubbornly, has 
done so little with the cow testing association idea 
that extension workers worry over the lack of interest 
in this important subject. 

2. There should be better bulls at the heads of herds. 
The bull is nine-tenths of the herd and this is a meas- 
ure of his importance. 

3. Cows which will produce milk with the greatest 
economy. 

4. The farmer must keep a set of books, for it is ab- 
solutely impossible to analyze a business for profit and 
loss without a well kept set of books.- 

5. Study must be made of the cost of producing 
crops, and more crops must be produced and fed on 
the farm which milk is made. Bulletins of the Agri- 
cultural experiment stations of Minnesota, North 
Dakota and Nebraska on this subject should be in the 
hands of every farmer producing milk. 

6. It would seem superfluous to say study should be 
made of the subject of feeding the milk cow, but here 
is a place for the most careful and persistent study, 
and on this subject there is available some splendid 
texts. 

7. The milk producer must be in position to con- 
vert the excess production of the spring months into 
one or all of the merchantable forms, or he must pay 
the big distributor for doing the work for him. It is 
probable that the lack of technical training in this 
country will continue the present arrangement indefi- 
nitely. 

8. Not enough attention is being paid to the con- 
servation of manure. The dairy farmer must erect 
manure pits and be prepared to handle this valuable 
material to best adA^antage. 

There are a number of things for the distributors to bear 
in mind: 



408 MARKETING AND FARM CREDITS . 

1. There is no reason in the world why the distribu- 
tor should object to collective bargaining on the part 
of the milk producer. This is a principle that is being 
established in other lines and is destined to stay with 
us. 

2. The clumsy method of manufacturing sentiment 
in the press should be given up. The testimony in 
the two famous* suits — New York, New Haven and 
Hartford Railroad, and the Colorado Fuel and Iron 
Company, is known to all men who read the papers, 
and every one is on the alert to discover in news items 
examples of subsidized writings. 

3. The efforts toward municipal ownership, the 
granting of franchises, have awakened in the people 
a new view of their rights. The social sense of the 
country is against having good will capitalized and 
used against those who grant the privilege. This is 
true of the big units among the distributors. 

4. Business men in their dealings realize that results 
are obtained most frequently by mutual compromise. 
Is there any reason why men accustomed to business 
dealings should require the lawyer as an intermediary? 
The injection of the lawyer into a deal makes people 
suspicious. 

5. All men who have studied the subject of distri- 
bution condemn the system of retail routes, duplicated 
and reduplicated in every section of a city. It should 
be possible to greatly reduce this lost motion. 

An extended, and practically complete bibliography, has 
been made covering all the available materials, but cannot be 
published for reason of the lack of space. 



GWENDELL BUSH 409 



THE FIGHT FOR BETTER MILK PRICES IN THE 
NEW YORK DAIRY DISTRICT 

GwENDELL Bush* 

In our state we have just been up ag-ainst this situation, and 
been up against it in; a very fierce sort of a way. We liave, 
I think, in our state more cow testing associations, if you will 
permit me to boast — I do not wish to have it taken in any boast- 
ing way — more cow testing associations than any other state 
in the Union, and we have had our departments of Agriculture 
w^orking- on the cost of milk production for all these years and 
with all these forces working, with all these forces working- the 
average production per cow in our state is something less than 
5,000 pounds. Now, we ought not to be proud of this; we are 
not, but it is a fact we are up against it, we are facing it. We, 
as good dairymen, are feeding the best we know how. We read 
the college bulletins and the bulletins of the experiment stations, 
not only of our own states, but of other states, and we take every 
opportunity to increase our production, but in spite of all we 
could do we were not able to produce milk in sufficiently large 
quantities per cow to make us a profit from the price at which 
we were forced to sell it. So then this made it necessary for 
the dairymen not only in our state, but in New Jersey, Pennsyl- 
vania, Vermont, Massachusetts, and Connecticut, where we have 
members, and increasing members, to stand up and take this situ- 
ation in hand. This organization I speak of — I will go back into 
history just a little bit — has been working and building a foun- 
dation for some six or eight years. It is known as The Dairy- 
men's League. 

I will tell you for your information, if you don't already 
know it, that it is a corporation, a corporation organized under 
the laws of New Jersey and doing business as I said a moment 
ago in New Jersey, Pennsylvania, New York, Connecticut, Mas- 
sachusetts and Vermont. They have been building up this foun- 

* Mr. Gwendell Bush of Little Falls, New York, is a prominent mem- 
l)er and official of the Dairymen's League of New York. 



41,0 



MARKETING AND FARM CREDITS 



dation. Last fall conditions became so acute that one of the 
contractors came to the meetings of the board of directors with 
a petition signed by 200 dairymen demanding that something 
be done; demanding that the Dairymen's League assert itself 
to get a living price for milk. And I want to tell you that 
we patterned our fight on the great fight waged around Chicago 
last spring. 

And I want to tell you this, that according to your secretary 
we took your pattern and made it over better than you had 
made it in the first place. 

So that is the condition. And I say the dairymen in those 
Eastern states took the greatest step the dairymen in that 
section had ever taken, when on August 28th, 1916, in the 
rooms of the department of agriculture in Albany they deter- 
mined that they, through their, at that time 13,000 members,, 
should stand up and demand a living price for their milk. 

Farmers' Share in Milk Prices Too Low 

I might say right here, while Ave had 13,000 members at that 
time, we have 23,000 members now; and, figuring an average 
of 15 cows to the head, which is small, it would be somethings 
over 350,000 cows. I might also say for your information that 
it takes over 400,000 cows to supply the metropolitan district 
around New York City. But, we have that many, and as I 
say we follow a pattern which is after the great fight made 
around Chicago. And it came at an opportune time ; at a time 
when the price of cheese, you know, was high. We have also 
had an investigating committee appointed in our state recently 
to investigate to see whether or not the farmer or the producer 
was getting his share of what the consumer paid for milk. 
Formerly the consumer thought that the farmer was the only 
man making any money in our country. They thought he was 
getting the greater part of that 12 or 13 cents, which they were 
paying for milk. But this committee has shown the consumer 
that the farmer was getting a very little bit, a very little bit 
of that 12 or 13 cents which they were paying for milk. As a 
result the producers had the public opinion with them. 

They had a right to make these demands. Why? Because 



GWENDBLL BUSH 411 

they liad been selling milk for a number of years at least, at less 
than it cost them to produce it. That is why they had a right 
to make these demands. We had a good experiment station^ 
and a good college department in our state, who had been keep- 
ing these records with various farmers all over the state. Now, 
every record that they give us sIiom^s that it is costing from 
$2 to $2.25 per hundred to make milk, and the selling figures 
show that the price of the big dealers in New York City for 
the last three years was $1.52 a hundred. AVhy then, you say, 
have not all the farmers and dairymen in New York and New 
Jersey and Vermont, Massachusetts and Connecticut, gone out 
of business? Simply because they were willing to sell their 
products to a poor market; they were willing to work their 
wives and children long hours in order to keep going. And I 
will say this, that that metropolitan district according to the 
census is over 1,000 cows short of what it was three years ago. 
So it goes to show you that many of the men were driven out 
of the business. And so those men dare to stand up and demand 
that they get a living price. They were not like the railroad 
men asking for an eight hour daj'^; they simply asked for a 
living profit on their milk. 

Nutritive Value of Milk 

And again they had a right, I say, to ask more for their 
product than they were getting, because it is worth more for 
food; it is worth more for food than they were getting. There 
is no protein-furnishing food that will give the amount of nu- 
tritive for the same money as milk will give. Why, here are 
some figures here that I wanted to give you. You have seen 
them already, or similar ones in the Saturday Evening Post in 
the issue of November 11th. It shows that a quart of milk is 
equivalent to three-quarters of a pound of beef in its nutritive 
value; it shows that a ciuart of milk is equivalent to eight eggs 
in its nutritive value, it shows that a quart of milk is equivalent 
to two pounds of bacon ; it shows that a quart of milk is equiva- 
lent to three-fifths of a pound of ham in its nutritive value. 
Figure out what those different meats cost; figure out what a 
quart of milk costs. Those two reasons I gave you were the 



412 MARKETING AND FARM CREDITS 

reasons on which the farmers based their fight. They told the 
dealers, "Boys, we have got the milk here for you—" I don't 
call it a milk strike; no more a milk strike than when you go 
down here and ask for a barrel of flour, and the man says, ' ' It 
is ten dollars a barrel; it is there, I want you to have it, but 
the price is so and so, and unless you pay it you can't get it." 
That is just what our milkmen told these dealers : ' ' The milk is 
there and we want you to have it; you have always had it; 
you are good fellows, but you have got to pay the price sufficient 
to give us a living profit, or else you can 't get it. ' ' 

And those men knew what it cost, in spite of all the argument 
that has been going on here this afternoon. I want to say that 
the men that were making these contracts knew what it cost to 
produce the milk, knew what it cost to produce this milk. We 
had this milk, and there were no strong methods used except 
w^iere boys in times of excitement broke over and did things 
which the leaders did not approve of, and which they them- 
selves would not approve of only in times of excitement. Things 
like that happened, but that is not what we based our fight on. 

How the League Is Constituted 

Those farmers had confidence in themselves and they had 
confidence in their leaders, and they also showed that wherever 
they had a leader that they could not have confidence in it 
didn't take long to get rid of him. And you understand — I 
will go back — I have just got a little off, perhaps — our organi- 
zation is a corporation. A man joining that organization gets 
a share of stock for every 10 cows that he signs up for, and he 
pays $2.50 for that share of stock. You see, it costs 25 cents 
a cow to join. For every one cow that he signs up for he gets 
a tenth of a share. And a man votes his stock by proxy or 
person, just the same as in any corporation, and this executive 
committee has the necessary power. When a dealer came up 
in our country and tried to buy milk of any particular branch 
of our organization he was told, ' ' We haven 't any to sell. I have 
signed it all over to the league; it is their milk; I have sold it 
to them. Go down to New York City; you will find them at 
'204 Franklin street, and they are there to write your contract." 



GWENDEL BUSH 413 

And our fellows, they just backed right up against the last 
ditch and they just were there with their teeth shut and deter- 
mination in their eye, and they just fought there for 14 days. 
They had prepared themselves for 32 days, and they fought 
for 14 days with the result which you know, at the present time 
they are getting 45 cents a hundred more for milk than they got 
a year ago. And I dare say if they made that price today which 
they made the first of September they would have had to make 
it a little higher to get out even. 

Talking with Professor "Warren — pardon me, if I am a little 
prejudicial' to my own state — talking with Professor Warren, 
whom I consider the best authority on the cost of production, 
he said to me the other day, "Bush, when you set that price 
I thought you had it too high, but I guess you will have to 
set it over again, for you haven't got it high enough now to get 
out. ' ' But, that again is straying away. So, as I said, the men 
were fighting there for 14 days, and the dealers learned an 
expensive lesson. I have it from the New York Times that it 
cost the dealers $1,500,000. I have it also from no other source 
than the New York Times that it cost the railroads $90,000. I 
have it also from the same source that it cost the farmer $500,- 
' 000, but I don 't think they take into consideration the fact that 
much of the farmer 's milk was salvaged in the cheese factory 
and butter factory, and not wasted to any great extent. And 
the farmers there are fighting with confidence in one another 
and confidence in their leaders. They were able to shut off 
New York City; they were able to control it so that when they 
had tied up New York City, New York City was getting 30 
per cent of its normal amount of milk. They held it to 30, 32, 
33, 34 and then the little fellows began to sign. The little fellows 
began to sign, they saw their customers getting away; they saw 
their plants idle and closed. I want to tell you, too, we saw 
on some roads the milk trains withdrawn ; and the little fellows 
began to sign after seven days. 

Winning the Milk Strike 

Then you will see the curve rising. You will see the milk 
going into New York so they were getting 43 per cent of the 
normal, and then again it got up, as more was released, it got 



414 MARKETING AND FARM CREDITS 

up to 60 per cent. The big companies then began to see the 
little fellows getting in on their territory. One of the biggest 
companies operating in our city had 90 per cent of its stations 
closed. They could not stand that any longer. They said, 
"Boys, what do you want; boys, what do you want?" And 
they came out in all the New York papers and the papers in 
the small towns a few^ days afterwards, and they said they were 
very sorry that they had not kept in closer touch with the pro- 
ducer. 

We took that for what it was worth. But I will say now 
that that company is the fairest of any company w^e deal with. 
After once they said, "Boys, what do you want?" And we 
told them what we wanted, and we had enforced our demands 
they were ready to keep their word. So far as I know they have 
done it. We are having our troubles with some of the smaller 
dealers in living up to their contract, but that is to be expected. 
That is to be expected; those are only isolated cases. I want 
to say that we were up against a very serious problem. Our 
fellows back there fighting like grim death probably held out 
of New York City 90 per cent of the normal amount of milk 
that came from the New York milk sheds, but those dealers had 
members of their organization in Indianapolis, thej^ had mem- 
bers of their organization in Chicago, members of their or- 
ganization in Philadelphia, members of their organization in 
Pittsburg, members of their organization in Boston, they had 
them in New Hampshire, in Maine and points in New York, and 
there is where they got the most of their milk from. I am going 
to say right along the same line that when you were making the 
fight of your lives here at Chicago — and if you fellows hadn't 
made the fight we probably never would have had the sand 
to have made it (applause) — and milk came — when you were 
making that fight it came from St. Lawrence county. New York ; 
it came from Otsego County, New York, in here to hurt you 
men. And as I understood the invitation to this meeting it was 
to bring the men liere from Boston, from Philadelphia, from 
Pittsburg, from Cleveland, from Chicago, from Indianapolis, 
and from New York, to take some steps whereby this same con- 
dition should not be created again. 



GWENDEL BUSH 415 

We did not want back in New York to hurt you men in Illi- 
nois or you men in Indiana. We are selfish enough also no.t to 
want you to hurt us, and we will not dare to go back and face 
our executive committee unless this meeting here today, through 
its delegation, through its committee, or some other way, makes 
some definite steps whereby the Milk Producers' Association in 
Chicago, in Indianapolis, in Philadelphia, in Cleveland and 
New York, and all the rest have taken some steps so that they 
will not be cutting one another's throats in the future. 

Organization for National Welfare 

What can we do ? AVhat can we do ? First, we must all make 
our contracts at the same time ; we must all be using the same 
thing at the same time. (Applause.) And we must also have a 
gentleman's agreement or something more binding, whereby 
your organization will protect ours, and ours will protect yours. 

Now, I don't know how this thing will be worked out; I don't 
know what the interstate commerce provisions are, but we cer- 
tainly must appoint a committee here today to look into this 
matter. And I say if it is impossible, if we have not the in- 
structions to start such a federation today, that we should ad- 
journ to some definite date when you delegates shall come to 
some set point to perfect such an organization. 

I think that is all I have to say to you. I came with you 
here from New York City and from the milk producers of New 
York to help start the ball rolling, whereby we could prevent 
the condition that happened here with us last fall, and with you 
last spring, and so on. Now, are there any questions? 

A Delegate from Illinois: Have you made any arrange- 
ments or have any idea of what the actual production of milk 
is in regard to circumstances as they do exist in some localities ? 

Mr. Bush: The prices we figured on and sold milk accord- 
ingly, were the average of our state, which is practically 4,500 
pounds. We beat that a little and put it to 5,000 pounds. Now, 
here are some figures showing new conditions which we had be- 
fore the Dairymen's League took this thing in hand. In my 
county alone we had records on 2,300 cows, and of these 2,300 



416 MARKETING AND FARM CREDITS 

COWS their average was 5,133 pounds of milk. It cost to pro- 
duce a quart of milk from these coavs 3.9 cents per quart. The 
price received was 3.3 cents, or a loss of 6/10 per cent to every 
pound made. So our basis of figuring Avas a 5,000 pound cow. 
I knoAV men here have talked about 8,000 pound cows and 9,000 
pound cows, but go and look up the records of your experiment 
stations and see how nearly your state comes to having an aver- 
age of 6,000" or 7,000 or 8,000 pound cow^s. We will say that Ave 
have there 25,000 pound coavs, and 15,000 pound cows. We do 
not take these into consideration. Neither do Ave figure on the 
basis of 10,000 pound cows, and neither do we figure on the basis 
of 3,000 pound cows. If a man cannot produce better than milk 
from 4,000 pound cows Avhy then I do not believe the Dairy- 
men's League can help him. 

Mr. Bulger : Has your organization any provision for taking 
care of the surplus milk of its members that you cannot sell? 

Mr. Bush : Like all new organizations that is one of the 
things Ave are weak in. It was taken care of through our friends 
who ran cheese factories and butter factories and kept off of the 
market as liquid and fluid milk, although I will say this, that 
we have over 40 cooperative plants operating in our state which 
we hope to start in the way of federation day after tomorrow. 

We are going to federate those plants if something does not 
prevent us, and we are going to do business from those plants 
just like one man. And I Avill say this, that Ave are having dele- 
gates come into our offices, two or three of them every day, get- 
ting the information of how much it costs to build cooperative 
plants. We have one in our town and it is a good one, and it 
has made money for the man Avho OAvns stock in it. They are 
paying now $2.35 a hundred for milk ; no test, taking the state 
standard, which is 15, yes, AA^hich is 20 cents above the price 
which the league was asking from the big dealers. They 
are paying for that there. They are putting aside many 
of these men. You could see it. They had delegations 
there every day, tAvo or three of them. They are look- 
ing into how that plant is organized and how it is run; that 
is, AA'here the headquarters of the league are. We had to issue 



GWENDEL BUSH 417 

many more memberships, "We are encouraging it as fast as we 
can, the cooperative plant. This is a great economic problem, 
and we never can hope to control it unless we have that chance 
for the surplus that you speak about and the farmer-owned co- 
operative plan is the only chance you have. "What they have 
done in Denmark, as it was mentioned here this afternoon, that 
is what made Denmark prosperous, the cooperating plants, and 
that is what will make dairying profitable in New York and Illi- 
nois and Minnesota and Michigan. We must have them, and we 
are getting them just as fast as we can. 

Mr. Potter : I do not regard these two as a parallel, do you, 
the league and the cooperative plant? 

Mr. Bush: Well, I think that they go hand in hand. The 
Dairymen's League depends on them. I will say this, however, 
that the Dairymen's League does not attempt to finance the co- 
operative plant in any way except perhaps it might spend a few 
dollars to send a man there to a certain station to explain how a 
cooperative plant might be organized. 

Mr. Potter : Do you expect to have a special act of the legis- 
lature to federate this? 

Mr. Bush: That I do not know. We are to take that up 
Friday. It will be taken up with attorneys. We will know 
what we are going to do before we start. 

Mr. Potter : Just one question, then : Your cooperative plants 
in the Dairymen's League are a combination — 

Mr. Bush: The Dairymen's League run their own affairs 
just as rapidly as possible ; we do not finance this in any way. 

Mr. Potter: The cooperative plants are separate? 

Mr. Bush: Yes; they are owned by each community. 

Mr. Potter: And the Dairymen's League acts as their agent. 

Mr. Bush: The Dairymen's League acts as their agent to 
sell their milk. 

Mr. Potter : Under contract ? 

Mr. Bush: Under contract to sell their milk. 

Mr. Potter : Is not that a violation of the Interstate Com- 
merce Act? 

Mr. Bush: We have never been picked up on that. 



418 MARKETING AND FARM CREDITS 

Mr. Potter : I am asking that question, and I think it is well 
for you to consider that. We have a different proposition, co- 
operative, all one, all one organization so as to keep entirely 
within the law. 

Mr. Bush: Well, of course, we have got to keep within the 
law, and we do not want to do anything that gets us outside of 
that, but those are the things that we have got to work out. 



MARKETING OF MILK IN TWIN CITIES 
DAIRY DISTRICT 

K. A. KiRKPATRICK * 

I consider it a pleasure to come before you this afternoon and 
report progress on the w^ork in the Twin City district. I feel 
just a little hurt that our speaker who left the floor did not in- 
clude Minnesota in his list of possibilities in the milk market- 
ing proposition. I think if you will examine the record of IMin- 
nesota in the dairy line you will find she is entitled to a great 
deal of credit, and, in connection with milk marketing, the point 
has been in my mind for some time whether marketing milk is 
to set the price standards for cheese and butter or are cheese 
and butter controlled by private corporations going to set the 
price for marketing milk? Which shall it be? I believe they 
are vital and intimately related. 

I wish to give you very briefly an outline of our work in the 
Twin City district. It was fostered by farm bureaus in four 
counties immediately around the Twin City district. I have 
the highest word of commendation for the three county agents 
who worked with me in that work. We have with us in the au- 
dience the man who is the father of that movement in that vicin- 
ity in the farm bureau organization work. This man went 
among the farmers on the representation that the farm bureaus 
would formulate some plan in attacking the marketing prob- 
lem in relation to marketing milk. 



* Mr. K. A. Kirkpatrick of Minneapolis, Minn., is county agent for 
Hennepin county, and has taken an active interest in organizing the 
milk producers in the dairy district tributary to Minneapolis and St. 
Paul. 



K. A. KaRKPATRICK 419 

As a county agent I did not take it up out of choice to achieve 
fame or glory or anything of the sort, but took it up because it 
was demanded by some 250 farmers, at least, in my county, or 
at least upon investigation, that many in three or four other 
counties. Further investigation showed it was also demanded 
in about 10 counties with the Twin Cities as their center. 

We got busy and organized first the local demands into local 
units. We based them on milk shipping points, or on milk 
hauling routes. When we got that done we found that our or- 
ganization could not cope with the dealer organization in the 
Twin Cities, because we were not united and it was necessary 
to form some central working organization. A delegate body 
from these locals met and elected a central body with five men 
as its executive officers. These are to act on instructions from 
the locals. 

Cost of Producing- Milk in Minnesota 

About the first thing we ran up against was the problem that 
has been up here all afternoon, the cost of production of the 
relative food values of milk, and we set out to find the cost of 
production as nearly as we could. We found that our statisti- 
cal route in the dairy sections of the State of Minnesota from 
figures kept for some nine years gave us a cost of production 
applying at present feed prices of about 19 cents a gallon. We 
found on checking these up in the nine counties represented 
that a vote of the representatives from those localities showed 
that their estimates of the cost of production was 18.8 cents per 
gallon ; that was their average estimate. Some person raised 
the point whether a farmer could accurately judge what the cost 
of producing and marketing milk was, and in repudiation of 
anything of that sort I want to say to you that I will take the 
average .judgment of 75 representative progressive farmers just 
about as quick as I will any one's bookkeeping. We found also 
that the average vote of 75 men on the cost of production for 
three months of the year was 15.8 cents against 18.8 for nine 
months of the year. Now, what were our farmers receiving for 
their milk in the face of this ? Some of the routes in ray county 



420 MARKETING AND FARM CREDITS 

represented by locals commanded 9i/2 cents per gallon last sum- 
mer; some of them got as high as 16 cents; not because they had 
better milk, not because they were closer to the market, but be- 
cause they happened in connection with dealers who did not 
pay them the price. There was absolutely no reason tinder 
Heaven why there should not have been a standard price for 
the same quality of milk, but some received dyo cents and some 
received 16 cents a gallon for their milk. 

Now, we went to work to get a concession out of these dealers, 
and to make a long story short I Avill say we have got a conces- 
sion of at least three cents, and in a great many places four 
cents per gallon from those dealers, taking effect the 15th of 
February. 

State Trust Law and Milk Marketing 

Now, what is the obstacle in the way of the work in Minne- 
sota? We are confronted by the most rigid anti-trust legisla- 
tion of which I have any knowledge. It is an action framed to 
help the poor farmer, but with one of those infernal kick-back 
propositions in it that says, "whenever two individuals get to- 
gether and attempt to do anything to regulate the prices, main- 
tain the prices, or fix the prices, or in any way do anything that 
tends to do that, they are guilty." 

If you are out in a far removed place from the city why you 
are in danger of having no question brought up, but when you 
are in the Twin Cities district, or when you are in any other 
district where you have such a piece of legislation as that, 
known to the consumers and political shysters seeking fame and 
glory, you are going to have something doing. So we are right 
up against it. And I believe that one of the problems that con- 
fronts this meeting here today is some standard recommenda- 
tion or resolution that the laws should be so fashioned that co- 
operative non-profit organizations shall not be classed in as 
trusts. We have no aim whatever in our organization to defeat 
the law or to come within the classification of trusts. We are 
strictly a cooperative enterprise, and we are attempting to get 
only a little of what is coming to us. The retail price in that 
territory is 9 cents a quart at present ; and the farmers are now 



MILK DISCUSSION 421 

receiving on the basis of 18 cents per gallon; that is 50 per cent, 
or 2 cents a gallon added if the milk is delivered at the plat- 
form of those dealers in the city. 

That, in brief, covers my report to you, I will say that we 
took our inspiration from your Chicago fight here. You did 
good work and it gave us the hunch that we could do something, 
too. 

DISCUSSION OF MILK MARKETING 

Editor's Note: Following Dr. Horton's paper, a large part of which 
dealt with the cost of producing milk and the progress of surveys, to 
find out such costs, the delegates indulged in considerable comment 
and exchange of experiences on this topic. 

Mr. Campbell (Michigan) : I have listened with great in- 
terest to the gentleman who was last upon the floor, and I be- 
lieve the gospel that he has given to us is all right. It perhaps 
should be one of the commandments to the farmer to raise the 
grade of his cows, but I understood this to be a marketing con- 
gress. We were here to see if we could get some small part at 
least of the price at which milk and its products went to the 
consumer. We are not here to take milk from the public nor 
from the sick room; we are here merely to get our small share 
or our proportionate share if it be possible of the price at which 
it goes to the consumer. Since a year ago the price of condensed 
milk of which my brother speaks has increased, the same grade, 
from $1.80 a case to $3.45 a case, which it was two months ago. 
Today it is more than that; it has gone up more than 100 per 
cent. From the man who buys your milk to the man who trades 
or sells it as a merchant. We want some little part of that in- 
crease. That is what we are here for. 

Now, I understood this to be a marketing congress to see if 
there could not be something done. I know from some personal 
experiences that I have had that when men are organized they 
can say something upon the question of prices and that will be 
true in your condenseries over the country; the price to con- 
denseries will be reflected in the price of milk or every other 
product, in a few weeks, and the prices may be given to you for 
another six months. I know that they have only given to us an 
increase now of about 17 per cent upon the price of whole milk 



422 MARKETING AND FARM CREDITS 

from the price of five years ago. They are getting more than 
100 per cent more for the manufactured product. And it is 
only done by organization. Not until the farmer and the milk 
producers have organized and can make their demands collec- 
tive ones, will you get better prices. 

Mr. IngersoU (of Ohio) : ^Ir. Campbell from ^Michigan has 
practically taken the words out of my mouth, that I intended 
to say to you, but I can still say a word which I think will be 
of profit. I think we must organize, and I want to say to the 
man from Minnesota that you have got to use the pencil before 
you knoAV what you are doing. You cannot go to the consumer 
and tell him that you want 25 cents a gallon for milk until you 
can show him that it costs you that to produce it. Now, in my 
little farm, I own a farm, and I think I have a distinction that 
no other gentleman in the room has ; I own a farm that has been 
in my family name for one hundred years the 25th of last Sep- 
tember, and I am producing milk today on the same old farm. 
I keep a record, and I have organized not only the Northern 
Ohio Milk Producers' Association, but I organized my own busi- 
ness. And that is what you have to do; to keep an account of 
every cow, the amount of milk she gives at night and in the 
morning. And I do not write down what she gives, but I have 
the scales in the barn, and every one of my employes are in- 
structed and they have to put it down. The footings are made 
correctly, and, as the gentleman spoke a few minutes ago, wheii 
we talk about a cow that will not give over 5,000 or 6,000 
pounds of milk in a year, I say to you, gentlemen, you can not 
afford to keep her. I have grade cows that will give 2,000 
pounds of milk in a month ; 2,000 of milk in a month, and I have 
weighed it, and they are only grade. I have cows that will give 
over 15,000 pounds of milk in a year. Why, down in Ohio we 
have 10 cows that give more milk than the average 100 cows 
in the State of Ohio. Now, the only way that you can find that 
out, men, is with the old pencil. 

Now, just a word in regard to the organization. "We went 
down to Cleveland, and we were threatened with prosecution by 
the prosecutor of the county on account of a trust, a milk trust. 
We told them that we would not furnish milk at the prices they 
were giving. Why, some of us furnished milk last spring when 



MILK DISCUSSION 423 

the milk was flusli at 10 cents a gallon net. I told tlie people — 
they had women's organizations, and the prosecutor, and a 
whole lot of consumers there, that we positively would not- fur- 
nish milk; we were going to go out of the business if we had to 
furnish milk at any such price as that, but we would furnish 
them milk in a cold receptacle if they would pay for the recep- 
tacle and pay a fair price for it. 

Now, I sent out in August some sheets to ascertain as nearly 
as possible the cost of milk, and I sent it to every county in our 
jurisdiction. The result of that investigation was that the aver- 
age cost to us in August qf this year was a little over 20 cents a 
gallon. I said to the consumers, "All right; we will call it 20 
cents, although that is less than it really is." I said, "Now, 
then, men you must give us one cent a gallon, wliich is only five 
per cent profit." They said it was perfectly reasonable and 
fair, and I challenge any business man who will undertake as 
hazardous a business as producing milk to produce it at five per 
cent profit; it is not enough. Now, we got an advance of three 
cents a gallon over last year, and we are going to have another 
advance of three cents before the first of January or else there 
are going to be things doing. We have got the figures to show 
what it costs and the average consumer is willing to pay us 
what it costs to produce milk, providing we have the data in 
detail to prove it. There will be no trouble about it, and there- 
will not any of us have to go to jail either, in getting what is, 
fair and equitable. 

Mr. Wilson (Illinois) : I do not believe according to the 
price of other things that the consumer is yet paying too much, 
for his milk. As far as organization is concerned I do not be- 
lieve that the farmers, the producers of milk have got their 
share of the profit in that milk. We ought to have an even 
split. You consider our investment and the amount of labor 
that we put into the production of that milk, and it is nothing^ 
more than fair to say that when the distributor of that milk 
sells that milk for nine or ten cents a quart that we ought to 
have half of what he gets for it. 

A Voice : Fifty-fifty. 

Mr. Wilson : In all fairness it seems to me that that is 



424 MARKETING AND FARM CREDITS 

what we ought to work for; work for efficiency and work for 
a split on a fifty-fifty proposition. 

Chairman Hibbard : Allow me to make this remark : That 
the chairman was not unaware of the fact that this is a mar- 
keting conference, but having been consulted on the subject of 
marketing milk a good many times during the past years, I 
have this to report, that so far as I can recall, and I have not 
kept the record of it, either, so far as I can recall in not a sin- 
gle instance has any one asked about how the marketing of 
milk might be solved without first going back and saying, 
"Now, what does the milk cost?" Do you know what it 
costs? How can we find out what it costs? Now, I want to 
ask you one other question that is in the minds of substantially 
every milk producer; perhaps a vague question, but neverthe- 
less the question of the cost of milk. Now, let me ask you 
this, and this meeting should not adjourn until we have some 
clear words upon it : What is the relation of the cost of pro- 
duction to the selling price, or what ought to be the relation 
of the cost of production to the selling price? And let me 
suggest this to you, ladies and gentlemen, that if you can an- 
swer that question you have answered one of the most difficult 
questions that has ever been put before any company of busi- 
ness people. That question has been asked, and has been 
asked pointedly and repeatedly, particularly for 140 years in 
the English speaking world. If you have any clear ideas on 
the right relation between cost of production and selling value, 
we shall indeed be glad to entertain them. Let me make this 
suggestion, that as one man put it over here, let us not take the 
most efficient. Where would the rest of us come in? We 
would be losing money. Some one suggests that we take an 
average. All right, suppose we take an average cow. An 
average cow ought to produce 7,500 pounds of milk with an 
efficient man managing her, and we base the price on that. 
Then what inducement is there to anyone to improve upon this, 
except the matter of profit? And if the price is so fixed that 
this man can make a living, very well, but will he not have to 
compete against a thousand or hundred thousand men who are 
more efficient, and who can make money and will make money 



MILK DISCUSSION 425 

and will put their product upon the market in such a way that 
the consumer will be enabled to get his product at a lower 
price. 

Mr. Kittle : I am glad for what Kirkpatrick said about Chicago 
and for what Bush said about Chicago. I have written these 
men time and again, not Mr, Bush, but Mr. Cooper and Mr, Man- 
ning, their secretary, back there in New York, I had the pleas- 
ure of being back there in August meeting with them, spent 
three days, as hard a three days ' work as I ever put in in my life, 
with those men, planning something that might have a result. 
They were good scholars, do not you forget it ; they got $2.30 — 
over our $2.00. They learned well, but they were desperately 
in earnest. There are things that have been said by Bush and 
some of the things that have been said by Kirkpatrick are just 
simply reiterating the things that we went through. You fel- 
lows know it; this is not a new story, and what is the use of 
my trying to say anything about it. But I want to say to you 
that this meeting has got to mean something. Bush is right, 
this man that spoke over here, Mr, Campbell — I met him at 
Lansing only a few weeks ago, and there heard him talk, and I 
knew as soon as he took the floor that he had something to 
say, and I want you men to get together and bring out and 
work out some of the plans that Bush has named to you this 
afternoon; we of the whole Nation standing as one to better 
the condition of the man who makes milk. 

This fight is not old — we are only eight years old next March. 
These men of whom Bush is a part are nine years old next sum- 
mer, that is all ; but this thing has been fought and fought, and 
figured and figured, and slept over and dreamed over, and out 
of it has come very little until our farmers took the bit in the 
mouth and then went out and did something, and now the 
whole United States is looking to us for a pattern. I do not 
stretch things to you when I say that they are writing me from 
more than 27 states asking that I tell them just how we did it, 
wanting me to lay down a piece of paper and cut for them a 
pattern that they may fashion their garment out of it. That 
is what New York wanted, that is what they did, and that is 
something of what Kirkpatrick wanted up there, for I prom- 
ised to go up there and tell him something, and then fell down 



426 MARKETING AND FARM CREDITS 

on the Job, because something else came up and spoiled it; not 
because I know so much; oh, no, but because you fellows have 
done it, and I learned from you how it was done, and I want 
the men who represent this part of the work, that have come 
here to Chicago, to get together immediately at the close of 
this meeting that we may start a federation of this work; that 
we may get together. And I want to say to you some other 
things, and those other things are that we are facing a very 
critical condition just at the present time. I do not mean we 
here ; I mean the 40,000 that Bush represents, the half a thou- 
sand or the thousand, or the 100,000 that Kirkpatrick repre- 
sents, the bunch that Mr. Hall represents over here, and the 
bunch that may be picked up in all of these other places — ^this 
man here from Duluth, up where they do not see much of any- 
thing, except ice and iron — I want you to remember that we 
are facing a condition that meets every one of us, and that con- 
dition is : When we get done with the strikes, what next ? We 
have got to continue this, men, we have got to keep on the 
ground we have already won. 

There is no use falling back. You know, the Germans 
started for Paris, and you know how far they got. They got 
on the hill at Verdun, and they could not go beyond that, and 
then they began to fall off of the hill. Are we going to get 
right at the top and fall off? I do not want you to. I may get 
out of the work before I see many of you again, I may; I am 
only saying that, but I want to leave this with you, the one 
thought, as I talked to you this afternoon, and that is that you 
as the people on the farms have got to stand shoulder to shoul- 
der or you are goners; there is no question about it. Get to- 
gether. Form this association tomorrow afternoon before you 
leave this city. We do not want to meet tomorrow. 

We do not want to keep you here ; but we want to get you 
together tonight before you go home, and we want every 
one representing any state other than our own to gather some 
place and form some sort of association which will hold you 
together. Clear from Lyons, New York, came milk into Chi- 
cago to break our strike ; clear from Chicago went milk down 
to New York to help break their strike. You may call it a strike, 
or whatever you choose, but I am going to say to you it is a 



MILK DISCUSSION 427 

fight for existence, that is what it is. Yoii have got to stand 
on that fight and work it out, and work it out systematically as 
this man Ingersoll says "with a pencil." 

The Chairman: Do you put that in the form of a motion? 

Mr. Jeffry: I do. 

(Motion seconded.) 

The Chairman : "Well, let 's have a statement of it once more. 
Who were the men to compose this? 

Mr. Jeffry : My motion is that there be an executive board 
of the Milk Producers Association, together with the delegates 
from each and every state represented here, get together to- 
night to formulate some plan of cooperation in the way of 
milk selling. 

Editor's Note: After discussion the motion carried and a committee 
consisting of representatives of various sections was appointed. That 
committee, with the aid of tlie National Agricultural Organization So- 
ciety's legal department, drafted a plan of organization, which is in-^ 
corporated in this volume as the constitution and bylaws of the Milk 
Producers' Federation of America. 

Mr. Brockway (Syracuse, New York) : I am a delegate es- 
pecially from the Holstein-Friesian Association of America. 
(Applause.) Our president is here as a delegate also, and 
also an assistant commissioner of agriculture from New York 
state. He also represents our association. We had something 
to do in the fight that ]Mr. Bush has told you about. In Syra- 
cuse we felt that if we were going to market milk intelligently, 
as other articles are marketed, that we ought to let the people 
in the city know what milk was. Milk has been marketed in 
the past simply as milk, without any reference to its status as 
a food. There has been organized throughout the United 
States recently what is known as the National Dairy Council, 
which is an effort to make an action as by one man of all the 
interests involved in the production of milk and dairy prod- 
ucts, milk, butter, cheese, ice cream and everything of that 
character. They have started out a campaign of advertising 
to let the people of this country know what the food value of 
milk is and to show that at 10 or 12 cents a quart it is the 
cheapest thing in the food line that could be had. Their head- 
quarters are here in Chicago. They have advertised recently 
in the Saturday Evening Post. Our association has contrib- 



428 MARKETING AND FARM CREDITS 

uted towards the advertising fund, which will be $250,000, 
which is going to be spent three years running, or a total of 
$750,000 to try to let the people of this country know what the 
food value of milk is. Our association has contributed $5,000 
a year towards that campaign. Now, those of us who live in 
Syracuse, having read all about California oranges and Cali- 
fornia raisins and California prunes, and Battle Creek grape- 
nuts (laughter) made up our minds that it was time to let the 
people of Syracuse know something about milk so we hired a 
page in our big morning paper, and in the center of it we put 
the last ad of the National Dairy Council which showed a great 
bottle of milk in the center with 10 cents on it, and around it 
was a series of pictures of how much it cost in beef-steak, in 
ham, in chicken and in eggs to get the same food value. It 
did not take very long to stir them up in Syracuse. They are 
startling facts, that few people know. The campaign which 
was won in New York and the campaign which was won here 
in Chicago have got to be followed up in a united effort to 
place before the people of this country what milk really is, if 
the battle that was won is to be succeeded by another winning. 
(Applause). And this committee, this committee which is go- 
ing to meet very shortly I trust will not lose sight of the fact 
that if it were not for scientific modern advertising there is 
not any line of business that would be the success that it is; 
and, taking into consideration, the same thing in regard to the 
marketing of milk, and to do it upon a sane, sensible, business 
like proposition that involves a knowledge of costs, and in- 
volves a knowledge of accounting, in spite of the fact that it is 
hard to do — and that is one of the things that our association, 
is trying to do, to educate the farmer to cow testing associa- 
tions, and to the fact that by the use of the purebred sire on 
the grade coav as shown by the bulletins of different states, 
that the average production in the first generation is increased 
better than 70 per cent. 

Cost is absolutely essential, and it is essential that we should 
know what that cost is, and I am very, very sorry that anybody 
should have allowed his sympathy with the long horn and the 
patient hard work of the man that is milking the cow to blind 
Tiim to the fact that no business — and the manufacturing of milk 



MILK DISCUSSION 429^ 

is one of the greatest businesses in the world — that no business 
can succeed unless the man that is manufacturing knows w.hat 
it costs him to produce. 

Mr. Canee (Massachussetts) : We have spoken of the pro- 
ducer of milk and the consumer of milk, but nobody has said 
anything about the distributor or the cost of distribution of 
milk. Now, it may be of interest to you to know that in Mas- 
sachusetts we tried to get accurate cost data of the cost of dis- 
tributing milk by 85 dealers in large and small cities and 
towns in that state. This data included the entire cost of 
labor, both hired labor, home labor and the labor of proprietor, 
paying his wages in the first place, second, his investment, and 
the interest on his investment, third, all his maintenance cost 
and his depreciation and replacement so that the figures that we 
have represent enough money for the distributor to handle the 
milk and make wages, but give him no profit. It includes in- 
terest on his investment. We found that for the cities of 
Springfield and Worcester, Massachusetts, in the beginning of 
1915, it cost 2.79 cents a quart to distribute milk from the time 
it left the dairj^man's plant until the time it was distributed in 
bottles to the consumer. If you add 25 per cent for increased 
cost, that makes a cost of distribution of about 3^/2 cents. 
With that we made very accurate cost accounts. We visited 
all the dealers and took their figures, going over their entire 
plant. I speak of it because I think there are no other figures 
as correct anywhere on the cost of distributing milk. The 
bulletin will be published shortly by the Massachusetts Agri- 
cultural College. It is worth while to the consumer to know 
that if it costs the farmer five cents and it costs the distributor 
3% cents, paying all the expenses of every kind, and he gets 
milk for 10 cents that there is still a margin to the retailers. 
This includes also surplus milk, bad debts, etc. It includes 
every possible cost that we could think of from the point of 
view of the distributer, and I may say that although these fig- 
ures have been published in Massachusetts we have never re- 
ceived any challenge of the figures from the distributer. Two 
and seventy-nine one hundredths in those two cities, and 2.64 
per quart on the average for the 85 distributers that we had 
in Massachusetts. 



430 MARKETING AND FARM CREDITS 



BYLAWS OF THE 
NATIONAL MILK PRODUCERS' FEDERATION 

ARTICLE I 
Name — This Federation shall be known as the NATIONAL MILK 
PRODUCERS' FEDERATION. 

ARTICLE II 
Purposes — The purposes of the federation are to promote the inter- 
ests of the producer and consumer of milk by: 

(a) Improving the conditions under which milk is pro- 
duced; 

(b) Improving marketing methods; 

(c) Standardizing the product; and 

(d) Genei'ally by doing such other things as are necessary 
with respect to the quality, the cost of production and distribu- 
tion of milk, and the return to the producer and the cost to 
the consumer as will promote the interests of both; and to do 
all things necessary therefor. 

ARTICLE III 
Membership — Any organization composed of producers of milk which 
conforms with the purposes and bylaws and rules and regulations of 
the federation may become a member of this federation by paying the 
annual membership fee of one cent for each individual producer repre- 
sented by such organization but in no case shall such annual fee be 
less than five dollars. 

ARTICLE IV 
General Meeting— 

1. Each member of the organization shall be entitled to one dele- 
gate and each such delegate shall be entitled to vote either in person 
or by proxy at any regular or special meeting. 

2. The regular annual meeting of delegates shall be held at such 
time and place as the board of directors determines. At least 30 days' 
notice of the time and place of such meeting shall be given by mail or 
telegram by the secretary to each member of the organization. 

3. Special meetings of delegates shall be called by the secretary 
upon direction of the board of directors. At least five days' notice 
shall be given as in the case of regular meetings, to each member of 
the organization. 

4. A majority of the delegates present at any meeting shall con- 
stitute a quorum for the transaction of business. 

ARTICLE V 
Board of Directors — The board of directors shall consist of 15 mem- 
bers of affiliated organizations chosen at the regular annual meeting 
of delegates. At the first annual meeting five directors shall be chosen 



MILK FEiE'ERATION 431 

for one year, five for two years, and five for three years. Thereafter, 
and as the term of each director expires, his successor shall be chosen 
for a term of three years. Vacancies on the board shall be filled by 
the remaining members of the board for the unexpired term. 

ARTICLE VI 

Directors' Meetings — The regular annual meeting of the directors 
shall be held immediately following the regular annual meeting of 
delegates. Special meetings of the directors shall be called by the sec- 
retary upon direction of the president. At least five days' notice of 
special meetings shall be given each director by mail or by telegram 
by the secretary. Five directors shall constitute a quorum for the 
transaction of business. 

ARTICLE VII 

Officers — The officers of the association shall be a president, vice- 
president, second vice-president and secretary-treasurer, who shall be 
chosen by the board of directors, each for a term of one year. Vacaa- 
cFes in any office may be filled by the board for the unexpired term. 

ARTICLE VIII 
Duties of Officers — 

1. The president shall preside at all meetings of the delegates and 
of the board of directors, and shall perform all the duties usually ap- 
pertaining to his office, and such additional or other duties as are 
prescribed or directed by tlie board of directors. 

2. The vice-president shall perform the duties of the president in 
the absence of the latter. 

3. The second vice-president shall perform the duties of the presi- 
dent in the absence of the president and vice-president. 

4. The secretary-treasurer shall attend all meetings of delegates 
and of the board of directors and shall keep a faithful record of all 
proceedings thereat. He shall have the charge and custody of all prop- 
erty and records belonging or appertaining to the federation subject 
to the direction of the board of directors. He shall perform all other 
duties usually appertaining to his offices, and such additional duties 
as the board of directors prescribes or directs. He shall from time to 
time as directed by the board of directors, make full and detailed re- 
port of all receipts and disbursements and of all funds and other prop- 
erty on hand, and shall at all times permit inspection and examination 
by the board of directors or its representative, of all books, records 
and property belonging to the federation. 

ARTICLE IX 
Powers of Board of Directors — The board of directors shall have 
and exercise full control and supervision over the affairs of the federa- 
tion and may do any and all things necessary therefor. It may dele- 
gate its powers to any committee of its members with full power to 
act, and in its discretion may require any person who receives or has 
control of property of the federation to furnish suitable bond. The 



432 MARKETING AND FARM CREDITS 

board may adopt and enforce necessary rules and regulations not in- 
consistent with these bylaws; and shall at least once in each year 
cause a thorough audit to be made of all books, records and affairs of 
the federation. 

ARTICLE X 

ANNt'AL Report — The board of directors shall submit to the regular 
annual meeting of delegates a full and detailed written report of the 
property and affairs of the federation, and shall incorporate in such 
report any recommendations it deems necessary or expedient. 

ARTICLE XI 

Amendments — These bylaws may be amended at any regular annual 
meeting of the delegates by a majority vote of the delegates present 
and voting, or by a like vote at any special meeting regularly called, 
if notice of such amendment was incorporated in the call for the spe- 
cial meeting. 

OFFICEES AND DIRECTORS OF MILK PRODUCERS' 
FEDERATION 

The National Milk Producers' Federation organized with the follow- 
ing as officers and directors: Milo D. Campbell, Coldwater, Michigan, 
president and director; G. W. Bush, Little Falls, N. Y., first vice presi- 
dent and director; H. W. Ingersoll, Elyria, Ohio, second vice president 
and director; George Brown, Sycamore, Illinois, secretary-treasurei" 
and director; K. A. Kirkpatrick, Minneapolis, Minnesota, director; 
W. J. Kittle, Suite 64(K642 No. 29 S. La Salle St., Chicago, Illinois, 
director; G. R. Rice, 1422 First National Bank Bldg., Milwaukee, Wis- 
consin, director; Guy C. Smith, Storrs, Connecticut, director; R. C 
Weisinger, Shelbyville, Kentucky, director; Dr. Alexander E. Cance, 
Amherst, Massachusetts, director; Clarence Sears Kates, Glenloch, 
Pennsylvania, director; J. H. Fransden, Lincoln, Nebraska, director; 
H. L. Brown, Birmingham, Alabama, director; W. B. Barney, Des 
Moines, Iowa, director; A. L. Brockway, Syracuse, New York, director. 



THE ORGANIZATION OF 
AGRICULTURE. 



THE COST OF LIVING AND THE REMEDY 

Charles McCarthy* 

SOME FOOD FOR THOUGHT 

"Eaise more cattle or eat less beef" — this is the word gent 
out from "Washington by the federal department of agriculture. 
The government points out that whereas the population of 
the United States has increased 24,000,000 in the last fifteen 
years, the production of beef cattle has fallen off more than 
6,000,000 in numbers. In the same time sheep have decreased 
10,000,000 while hogs have increased only 11,000,000. 

Per Cent I^sTcrease or Decrease, 1901-1914 

Population . . Increase 27.1 

Number of Beef Cattle Decrease 26,9 

Number of Milk Cows Increase 23.1 

Number of Sheep Decrease 20.4 

Number of Hogs Increase 3.4 

Bushels of "Wheat Increas'e 13.5 

Per Cent Increase or Decrease, 1900-1910 

Urban Population Increase 34.8 

Rural Population Increase 11.2 

If the farmers make money, there will be a good many fa,r- 
mers, and much food and raw material. 

If farmers do not make money they will go into some other 
business. There will be less food and less raw material. 

If the farming population is falling off relatively and tenan- 
try increasing relatively, then the cost of living will go up. 
The manufacturer must pay higher wages. Industrial dis- 
turbances will take place. With higher costs we cannot hope 
to compete with foreign countries. 

* Dr. Charles McCarthy is chief of the Wisconsin Legislative Refer- 
ence Library at Madison, Wisconsin, and treasurer of the National 
Conference on Marketing and Farm Credits. This address was deliv- 
ered before the City Club of Chicago, Nov. 28, 1916, and is reproduced 
on account of its treatment of some important basic relations of our 
national life. 



436 MARKETING AND FARM CREDITS 

The city cannot live and prosper, and the manufacturer can- 
not live and prosper unless the farmer is well off. If Chicago 
were situated in the middle of the Sahara Desert, would it be 
Chicago ? 

Can a manufacturer or business man afford to see increasing 
congestion in the cities, with constantly rising costs? 

Very true is the old German proverb : ' ' Hat der Bauer Geld, 
hat's die Ganze Welt." (If the farmer has money, everybody 
has.) 

What the Bordens Do Not Know 

You have recently had a milk strike in Chicago. Do you 
suppose that strike would have been necessary if proper atten- 
tion had been given to the whole question of rise in cost and 
the proper organization of the industry? The Borden Com- 
pany, the great organization in this business, admits its lack 
of knowledge of the whole subject. They say in their adver- 
tisement in the New York Times for Sunday, October 22, 1916 : 
' ' Even with our close acquaintance with the industry 
as a whole we have positive knowledge of our own 
business* only and know very little of the real condi- 
tions which confront the dairyman. From this limited 
knowledge we believe that he was justified in demand- 
ing more for his milk. We know his costs have in- 
creased and we believe his profit has been inadequate. 
We blame ourselves for not keeping in closer touch 
with his problems and letting him know ours and 
acquainting him with the costs and profits of distri- 
bution, and above all, urging him to consider how 
vitally his interests are concerned in keeping down 
retail prices to the consumer in order that milk con- 
sumption may be increased rather than reduced and 
that milk may continue to hold its enviable position of 
furnishing more 'food value' for the money than any 
other food product." 
Efficiency in agriculture must not be merely distributive 
but must run through the whole process down to the smallest 
item in organized production. This can only be done by the 



CHARLES MCCARTHY 437 

most thorough organization of every process and can only be 
done through organized producers. 

Scientific Management Applied to Agriculture ' 
There is a close parallel between organized agriculture and 
scientific management of what is known as '^ efficiency in busi- 
ness." Now, take Denmark — one sees in the whole country 
south of Copenhagen, great fields with very few fences. These 
fields are planted in a certain way with certain crops, which 
are used in feeding cattle. If you look, you will find that ev- 
erywhere the cattle in this vicinity are the same variety. In 
one place they look like Jerseys, but are red. 

"Motion Studies in Cattle" 

They are tied in the fields by a certain length of chain. The 
idea is not to allow the cattle to trample down the forage and 
wander around from place to place. They are moved at certain 
times during the day, and thus gradually eat their way through 
the forage in the field. They are not driven or allowed to go 
to water there as they are in America, but the water is brought 
to them so that they will always be on the job eating and con- 
verting the fodder into milk. They are milked in the fields at 
certain times. The amount of fodder in the field is carefully cal- 
culated. The statistics on each cow are carefully kept so that 
they can determine minutely how well each pays her way. The 
milk is carefully brought to the cooperative creameries, which 
are pretty much of a standard quality. The whole work is 
treated in a certain kind of a way practically throughout the 
entire nation. The byproducts are fed to pigs and all these 
pigs are of the same breed. Going with them is the hen, and the 
hens are stanri ardized by practical and uniform breeding. 
The marketing of all the eggs is carried on under standard- 
ized processes. Of course, the farmer cannot do all this himself, 
but the government has provided machinerj^ whereby every 
problem can be solved. 

All over Europe organized buying and selling, organized and 
standardized business is gradually coming. "Control Boards" 
which are merely planning boards, owned by farmers, are seen 
everywhere In Germany all such organizations must be in 



438 MARKETING AND FARM CREDITS 

auditing unions. Either these unions must be organized for 
their own auditing or else the government will come in and 
audit them. It is very certain that if farmers are going to do 
this kind of book-keeping and this kind of business, it must 
be done well, so that this whole agricultural organization work 
is based upon the highest kind of book-keeping. The govern- 
ment wisely malies proper book-keeping compulsory. 

What Would Henry Ford Do with Agriculture? 

If Henry Ford were to be given the task of organizing the 
business of agriculture, — to stop its wastage, reduce its cost, 
and increase its production, — what would he do? The answer 
is obvious. He would standardize, systematize, apply increased 
capital wisely, give higher inducement to the producers, — ^he 
would Fordize agriculture, if he wished to see real and long- 
continued prosperity. Supposing he were given a territory in 
Wisconsin to work on. He would make a thorough survey. 
He would find what kind of soil there was, what kind of cli- 
mate, what markets, and what possibilities for labor conditions. 
Given these factors and others, he would then proceed to plan 
the work so that if, for instance, he brought cows upon the land 
they would be cows which would pay the highest return and 
which would produce the best milk under certain conditions^ 
and he would then reduce every element in the marketing of 
milk to a fine point just as it is done in Denmark and other 
countries. 

Nor could he do this by putting the land into one great vast 
field, for he would learn that no country has ever existed for 
a long while in prosperity unless there was a great percentage 
of land ownership, — of small or medium-sized farms. His psy- 
chology would be wrong if he thought he could make one big 
factory out of it. He would have to work with all the lessons 
of humanity before him. The only way lie could make if ef- 
ficient, permanently, in fact, wonld he to instruct all the sep- 
arate land-owners, {really small manufacturers), to work 
together collectively. 

It is often said that the tractor will mean very large farms. 
It does not mean any such thing. It probably means that 
tractors and other machinery will be owned in common and 
used scientifically in common with the greatest economy. France 



CHARLES McCarthy 439' 

by using this method is producing as great a crop today as in 
1914 before the war began. The same limitations must be placed 
upon land organization, as we know eventually must come with 
big factories like Henry Ford's. Henry Ford is but an individ- 
ual. "While he is at the head of the Ford system, he probably 
will do justice to the working man and will make it profitable' 
for the working man to work for him, but we cannot tell whether 
or not, when he dies, some other less broadminded and more- 
selfish man will come in and change the whole thing. The same 
thing is true of the farm. 

A system of very large farms cannot exist for a long time. 
Henry Ford believes in big units. He would learn, however,^ 
the disastrous effects of large land ownership, tenantry, etc. 
He would learn from the lessons of the Russian boyar or the 
Irish landlord that no nation could live with large areas of 
land in the hands of a few men. A study of the history of 
Eome would show that it would not do to have these large areas 
controlled in this way. Indeed, the same criticism that could 
be applied to the Ford works now could be applied with double 
force in agriculture. "When business is so big that it affects 
the welfare of millions of people, we cannot have a Marcus 
Aurelius Ford succeeded hy a Cotnmodus Ford. In agriculture 
good landlords can never take the place of a large degree of 
ownership by the cultivators. Good landlordism has always, 
failed in agriculture. 

Distributive Waste 

Despite the Borden statement there is still enormous waste 
in distribution in many products, as well as in ineffective or- 
ganization of the crop or product and lack of standardization. 
For example, a man has an apple orchard or a peach orchard. 
He picks his fruit and dumps it into Chicago, and the place 
is over-supplied with peaches and apples because of the fact 
that, there being no organization of the industry, everyone is 
dumping there. He practically loses his crop. The next year 
it occurs again. He cuts down the trees. Millions are lost 
this way every year. It does not pay. Does the consumer- 
in the end win by this poor distribution? 



440 MARKETING AND FARM CREDITS 

Let US suppose a small farmer starts to grow pineapples in 
Hawaii, How far will he get sending a few boxes to the 
steamer to send to San Francisco? Obviously he must organ- 
ize. We will have more and better fruits and more and better 
products of every other kind when we have a better organiza- 
tion of the industry. 

A system of a great number of very small farms owned by 
the farmers themselves, combined together, can exist and bring 
about a great efficiency. This is just the form that is now 
working out in Europe and also to a great extent in Canada, 
Australia, and South Africa, and it is just the thing that Henry 
Ford would do if it were his job. It is the solution of the rural 
problem in America. It is the only sure way consistent with 
the lasting welfare of the country by which waste can be elim- 
inated, agriculture be made scientific and the cost of living be 
effectually reduced. 

Does This Mean an Agricultural Trust? 

''But," says Mr. Consumer, "You are creating here an organ- 
ization which will be nothing different from the monopoly or 
trust, — an efficient instrument but a tyrannical and dangerous 
one perhaps." 

Do we want the marketing of produce, then, on the trust 
basis? Certainly not. There is no fear. Millions of small 
owners never have been and never can be combined into a dan- 
gerous monopoly. Even in oil, the greatest gain to the pro- 
ducer outside of the monopoly end of it is in the method found 
to take care of the byproducts, etc. Think of the many things 
that are used, — the pipe lines, the tank cars, etc., etc. — which 
have reduced the cost of oil so greatly. We use this oil be- 
cause of the great efficiency of the organization. If monopoly 
is to come out of agricultural organization, we do not want it. 
It will be bad for the Nation. But there is a great gain from 
saving and reducing the cost by organization, scientific man- 
agement, and efficient selling, production, transportation, etc., 
which we must have. That is what we may expect from organ- 
ized agriculture. 



CHARLES McCarthy 441 



Save a Few Billion 



If the Danish farmers save $.28 on a dollar by scientific 
management, reckon up that amdunt on nine billion dollars 
"worth of agricultural produce. Compare this, then, if you 
wish, with the million dollars a day that Brandeis said the rail- 
roads could save, and which the railroads have said they have 
saved. Is it worth while? 

The packers say that they save everything but the squeal of 
the pig. Of course what they mean is that they save every- 
thing after the product comes to them, but what have they done 
any more Jhan Borden has done to save the great waste of the 
product before it has come to them, — the organization in the 
production end and the transportation end, the obtaining of 
needed capital at reasonable rates, etc. ? 

True Preparedness 

We have just established a Council for National Defense. If 
that council will read recent events in Europe it will find that 
the most potent influence in the reorganization of Russia today 
is the thirteen million cooperators. It will find that the food 
prices of England are being regulated by the cooperative 
wholesale movement. It "will find that the 35,000 societies in 
Germany, organized in great federations, having a turnover of 
nine billion dollars, is a tremendous factor in the organization 
of its industries, for war or for peace. It will find France com- 
pletely organized. If for national defense alone, tve must oT' 
ganize America. 

Give Agriculture a Minimum Wage and Settle the Cost of 
Living Question 

But there are several ways to give a minimum wage. You 
can give it by law. You do so when you place a tariff on cer- 
tain goods. You give the protected article a minimum wage. 
Or you can do it as Henry Ford does it by greater efficiency, 
coordination, economy, and better organization. It is this 
latter sort of minimum wage that Ave need for the agricultural 
industry and every man, woman, and child in it, if we ever 
expect to check the rising cost of food and raw material. 



442 MARKETING AND FARM CREDITS 

If a country has no industries, there is no prosperity. In. 
the end there is no country. If an industry is declining and 
if the rewards are not sufficient to make it pay to induce people 
to go into it, it becomes a matter for public alarm. What do 
we do in America? If an industry is socially valuable, we do 
not hesitate to subsidize it. John Smith ran a woolen mill in 
Massachusetts, He soon saw, however, that the cheaper wool- 
ens coming from England would destroy his little business, his 
little village, and throw his people out of work. He appealed 
for aid. "Was it socially desirable that the industry be con- 
tinued? His neighbors thought "Yes". Therefore, we, his 
neighbors, the citizens of America, gave him a tariff, — in other 
words, we gave him a subsidy by chipping in to help. If we 
find an industry socially, yes fundamentally, valuable, and we 
find that this industry, which is the one industry that regulates 
the cost of living, and whose decline endangers the social and 
economic fabric, is declining, what should we do? I am re- 
ferring to agriculture. The statistics I have already given you 
are my proof. The congestion in the citie? furnishes proof, 
and the entire procession of the girls and boys from the farms 
proves what I say. The high cost of living today furnishes 
proof, which cannot be denied. Agriculture relatively is a de- 
clining industry. 

But I am not asking for a tariff for agriculture, — I am not 
asking for a subsidy. I am asking for sympathy and advice 
only and help in organizing the industry so as to eliminate 
waste, to make it profitable, and to keep the boys and girls on 
the farm. Even in considering the tariff on manufactured 
goods, we do not feel as great need of it as we do of high grade 
organization and in general the highest kind of elimination of 
waste. Does Henry Ford need a tariff? If all industry in 
America were organized as carefully as Henry Ford's work, 
would it need a tariff ? So what I am asking for in all this 
matter is the help of the cities in truly organizing the efficiency 
of our farms. 



CHAHLES McCarthy 443, 

The City Man's Share 

Consider milk, for instance, again. Will the consumer allow 
the producer and the milk dealer to fight it out between them- 
selves and continue to make a contract which would give them 
both the profit, and yet take it out of the customer? I believe- 
that both of them should have a good profit, but I do also think 
that the consumer should see to it that waSlte is eliminated, 
that the future supply of milk is not endangered by the de- 
creasing of rural population, but that rather the consumer 
should aid in every way towards the organization of the busi- 
ness of agriculture and the elimination of waste. He should 
not stand in the way of, and oppose, such organizations. They 
are inevitable. He should not think merely of his own mo- 
mentary situation, for, in the end, the situation of the pro- 
ducer and the dealer are the same. In the end the consumers' 
interests and their interests are the same. He cannot hope to 
live on the farmers, for they will not be lived upon. They are 
too intelligent today. Opportunity is too great for bright and 
educated boys and girls for them to be lived upon. They will 
go into the city and compete with the people in the city, and 
the high cost of living will do the rest. The City Club of Chi- 
cago has just as much interest in helping th\e organization of' 
the farmers ivho bring the food into Chicago as it has in ivorMng 
for better government luithin the City of Chicago. 

"Dumping" — One Way to Prevent It 

The International Corporation has been formed to extend' 
our trade and capture the world markets. Does anyone think 
that that device, however powerful it may be, can be successful 
with the cost of living advancing at tremendous leaps? Does 
anyone believe that high tariffs, or the Webb bill or any other- 
device can keep the cheap goods of Europe, produced in des- 
peration and despair, from flooding our markets after the war 
if our national carelessness and waste of raw material will send 
our own cost of production beyond the returns due from or- 
ganization of finance, subsidies, or tariffs or any other like 
device ? 

One way of meeting dumping effectively is to reduce costs of 



444 MARKETING AND FARM CREDITS 

production and cost of living by organization of our great ag- 
ricultural interests. Henry Ford doesn't stay up nights 
worrying about the dumping of automobiles into America, and 
if the food supply is organized half as well as the manufacturer 
now organizes his business, we may not fear "dumping" or 
trade war. If we don't we have everything to fear. 

The Full Dinner Pail 

Even if Henry Ford or the most skilled and scientific man- 
ager in America raises wages, does that insure contented and 
happy workmen, if the dollar is constantly cut in two? The 
elimination of waste in food or raw material keeps the dinner 
pail full more effectively than all the tariffs ever in existence.- 

With all these indisputable facts before you, Mr. Employer 
and Mr. City Man, isn 't it' clear wisdom to set your great ma- 
chinery to work to eliminate this long neglected waste? 

The farmer isi a manufacturer and is entitled to all the help, 
encouragement, profits and advantages of a tnanufacturer. A 
hundred years ago the Industrial Revolution changed the man- 
ufacturing industry from small units and hand work to steam- 
driven compact organisms which are familiar to us all. An 
agricultural revolution will soon change agriculture from the 
wasteful, ineffectual, unscientific, disorganized and chaotic in- 
dustry it is today to something very like the efficiency now 
known in all other industry. But woe to this country if that 
terrific change does not bring with it a complete recognition of 
the facts in history, — that strong sturdy manhood and ivoma/n- 
hood can come only and exist through ividely extended owner- 
ships of the land and profltahle, scientific and independent but 
coordinated effort upon the part of the millions of owners 
thereof. 

To do this work the National Conference on IMarketing and 
Farm Credits and the National Agricultural Organization So- 
ciety have come into existence. 

The Fourth annual conference will be held December fourth 
to ninth at the Hotel Sherman. Come and help us find a way to 
save a couple of hillions. 



KENYON L. BUTTERFIELD 445. 



A BASIS OF NATIONAL AGRICULTURAL 
ORGANIZATION 

Kenyon L. Butterfield * 

A distinguished American sociologist has recently said that 
he felt we were entering upon a new epoch, into the nature 
of which we cannot see very far, I venture to suggest two 
elements that will characterize the next 25 or 30 years. 
One will be the working out of the relationship between 
an effective, patriotic nationalism and a broad, brotherly, fair- 
minded internationalism; the other will be the reconciliation 
between organized efficiency and real social democracy. 

The farmers of the world must play their part in this new 
epoch. Therefore, the first element in a national rural policy 
is the recognition of the relationship between the American 
farmers and the farmers of the rest of the world, and the rela- 
tion of both to the consuming population of the entire world. 

The second element is more immediate and pressing. For a 
generation, we have been developing big business. "Organi- 
zation", "administration", "system", "efficiency", have been 
the watchwords. Great combinations of capital have won their 
way not primarily because they saved in production but be- 
cause they could bargain to advantage. Great organizations 
of labor have developed as a means of collective bargaining. 
But, in spite of 50 years of agitation and of many experiments, 
in spite of all the lessons to be gained from European expe- 
rience, speaking broadly, American agriculture is still unor- 
ganized. The last few years have seen great gains, and, with- 
out doubt, we are on the eve of many fruitful movements in 
cooperative agriculture on the business side. 



* Dr. Kenyon L. Butterfield is president of tlie Massachusetts Agri- 
cultural College, Amherst, Mass., and a distinguished thinker and 
writer on rural problems. 



446 MARKETING AND FARM CREDITS 

Can Democracy Become EflEicient? 

But it is clear that organized efficiency has its perils, whether 
in respect to combinations of capital, or combinations of labor, 
or combinations of any other form, and the fundamental peril is 
that efficiency seems to mean the elimination of individual 
initiative and freedom and the submerging of the individual 
in the will of the mass, and even placing him at the beck and 
call of a small group of men who virtually dominate the will 
of the entire mass. 

The question then comes, can we have a real democracy 
based on equal opportunities for all, on freedom of individual 
idea and initiative, on the brotherly feeling, and still make it 
effective in production, in distribution, and in all political, 
economic, and social relationships. 

Four Principles of Action 

This question, I take it, lies at the foundation of any dis- 
cussion of national rural policy. The need for organization 
seems to be clear; the only question is a method which shall 
be at once effective and democratic. There are many earnest 
students and friends of agriculture who fear that in the pas- 
sion for organization and in these great new movements for 
organizing farmers, we are sowing the seeds of a poisonous 
plant which will eventually destroy the last vestige of true 
American democracy. I do not share this view, but I do share 
the sense of danger, and I think because of this danger that 
there are three or four characteristics of fundamentally sound 
rural organization that must be preserved at all hazards. 

1. In the first place, the organization of agriculture 
must be absolutely cooperative and not militaristic. 
It must not be the kind of organization that is 
"bossed" by a few men at the top, no matter how those 
men may be chosen. There will need to be managers 
and guides and counselers and authoritative officers, 
but voluntary, loyal cooperation of individual farmers 
must be the binding force. 

2. The local community must be recognized as the 
unit of organization. The little local farmers' ex- 



KENYON L. BUTTERFIELD 447 

change, or credit union, or farm loan association, or 
whatever else it may be is the key to wholesome agri- 
cultural organization. There may be district or county 
unions; there may be state and national associations, 
but they must all go back for their power and their 
effectiveness to these little local community cooperative 
business units. 

But the community idea must go even farther than 
this. We must think more and more of the community 
as a unit studying itself, measuring its resources, de- 
-ciding on what kind of crops it shall grow, what sort 
•of stock it shall breed, how it shall buy and sell, how 
it shall educate its children, how it shall look after 
its recreation and its morals. We must think primar- 
ily not iu terms of the individual farmers nor in terms 
.of the American farmers as a mass, but in terms of 
local neighborhoods or communities of farmers. 

3. We must recognize institutional division of la- 
bor. That is to say, each agency must find its job 
and do it thoroughly well. There is one task for the 

grange or other voluntary organization; there is 
another for the agricultural college; there is another 
for the board of agriculture ; another for the church ; 
another for the school. Let each one do its work su- 
premely well, but let no institution try to do the work 
of another. 

4. And this brings us to the principle of coopera- 
tion of agencies. Not only must individuals cooperate 
in their communities but great institutions, such as 
those I have just mentioned, must cooperate in com- 
munity, in county, in state, and in nation. Each one 
of these institutions should have a big, statesmanlike 
program, but this program should include hearty co- 
operation all along the line with other institutions. 

National Clearinghouse Needed 

What we will have then, if these principles are carried out, 
is a program and a policy for every farming community, for 
every agricultural county, for every state, and for the Nation 
as a whole. 



448 MARKETING AND FARM CREDITS 

It is obvious that to carry out any such program means some 
large, general overhead group. Personally, I believe that we 
must find this not hy organizing a nev^^ association, not by 
allowing any of the present agencies to try to absorb the 
others, but simply by forming clearinghouses made up of 
representatives of all agencies, both those publicly and those 
privately supported. I do not know what these may be called 
but essentially we will have rlocal or community committees 
or councils. We will have the same thing for the county, for 
the state, and for the Nation. Such councils would simply serve 
as clearinghouses for discussion, for avoiding overlapping 
for mapping accepted policies, and for bringing to bear upon 
the agricultural problem the best judgment and wisdow of all 
interests. 

But, mark you, we cannot successfully legislate this thing 
into existence; we cannot by any law require the development 
of this sort of clearinghouse. It must be done voluntarily; it 
must come as the result of the desire to work together. It 
might be powerfully aided by the United States Department 
of Agriculture, but it cannot be controlled by that department. 
It might perhaps be helped by a permanent federal country 
life commission, but it could not be managed by such a body. 
I seriously question the wisdom of the proposal, in its present 
form, for chambers of agriculture. 

It is hardly necessary to add that a movement like this must 
be close to the soil; it must be primarily in the hands of the 
farmers themselves. 

The possibilities of agricultural organization are boundless. 
The time is ripe for a national rural policy and program. Have 
we the statesmanship and executive ability to unify and the 
cooperating spirit to hold together all rural interests? 



J. N. McBRIDE 449 

ORGANIZATION AND PRICE MAKING 

J. N. JMcBride* 

The outstanding fact compelling attention from every 
thoughtful citizen is that farm products in the United States 
are not keeping pace with population. Agriculture is not suf- 
ficientlj^ remunerative to attract capital or secure labor. 
Increased foodstuffs and supplies from the soil are being de- 
manded with the increasing city population. Public or legal 
recognition of this fact has taken form in the nearly complete 
removal of tariff duties from agricultural imports and in the 
Farm Loan Act. The merits of this act are obvious, but most 
noticeable from an economic standpoint, that agriculture, the 
basic source of finance, should be assisted to re-finance itself. 
There is a case reported of a spring being piped to a water 
tank at a lower level. The water overflowed this and wasted, 
"When the midsummer drouth came the spring partly failed 
and expensive pumping machinery was installed to return the 
water to the spring. A simpler method would have been to 
adjust the flow. 

Coordinating with agriculture in service is transportation 
which is the extended function of production. The railroads, 
after years of competition, yielded the province of rate making 
to governmental supervision. The inflexibility of these regu- 
lations with advancing prices have been ^ cause of inadequacy 
of service and congestion, so that the railroads are like agri- 
culture, underpowered and not functioning properly. Agricul- 
ture, after diagnosis, has had cooperation prescribed as a 
remedy. 

Functions of Farm Organizations 

What are the full functions of agricultural organizations? 
That is, are they to operate or cooperate? Is a cooperative 
selling organization truly cooperative if it acts independently 



* J. N. McBride is state market director for Michigan, Lansing, Mich' 
igan, and a prominent farmer. 



450 MARKETING AND FARM CREDITS 

01' sells competitively against a similar organization? Is co- 
operative distribution a mechanical combination of units to 
render a cheaper service alone or endowed with intelligence 
to measure exchange values? Around these concepts men's 
minds are considering the full or restricted powers of coopera- 
tive distribution. It is now possible to adjust cooperative 
sales organization in a legal way to avoid a possible conflict 
with the federal anti-trust laws. This was accomplislied by 
the Clayton amendment, exempting agricultural and horticul- 
tural associations "not organized for profit nor having capi- 
tal stock." These bodies can have capital derived from mem- 
bership fees or hypothetical collateral of its membership. To 
the laymen the distinction is not over-great but the point is 
that the gain shall come to the producer from his product and 
not from his investment outside as a distributor. That this 
will prevent selling organizations from being monopolized and 
controlled from the ownership of stock and retain their con- 
trol with the producer of the product is the aim. 

The Clayton Act and the "Rule of Reason" 

The advanced position now possible in the legal status of 
agriculture came with the Clayton amendment, which was stat- 
utory recognition of what the "rule of reason" was. This rule 
of reason, as expressed by the supreme court, is now no longer 
debatable. The student of economics should interpret the laAv 
as it is now from an economic viewpoint, if possible. In this 
case no difficulty attaches when profit or gain comes through 
enhancement of the product to the producer. It is used in re- 
production to the ultimate gain of consumers. If the gain 
inures to the benefit of those who maj^ hold stock as distrib- 
utors it is not so used but is diverted into non-productive uses. 
Encouragement of production was desirable. This was the 
rule of reason founded upon the nature of the industry ex- 
empted. 

Agriculture is an industry made up of small units and de- 
centralized. Very few corporations engage in farming be- 
cause it does not easily lend itself to corporate action. A con- 
densary, for example, handling the milk of 1,000 persons could 



J. N. McBiRIDE 451 

of its own volition fix prices. Restraint of trade always as- 
sumes a collective activity. Any two of the farmers who sell 
milk, acting collectively as to price, would technically be guilty 
of restraint of trade. "Without applying the rule of reason 
would be to legislative in favor of the large units by denying 
the mobilization power to the smaller units. The law then 
would be, while aiming to promote competition, tending to 
prevent it by the assumption of equal power to all units re- 
gardless of size. The technical legal mind would deny in chem- 
istry for molecules to be made up of a different number of 
atoms. 

Congress and the supreme court have made these distinc- 
tions and decisions, notwithstanding some preconceived ideas 
which are not the laws nor facts. The Civil war settled once 
for all the priority of its citizens' dual relationship, first, to the 
national government, and secondly, to that of the state. While 
the federal government has gone far to recognize each state's 
power along police lines, it has never recognized the right of a 
state to declare a crime what the Nation distinctly declares to 
be a right. From the standpoint of ultimate action and moral 
force, anti-trust laws were rendered obsolete with the enact- 
ment of the Clayton amendment. This may not be a completed 
legal fact in and of itself, but an ultimate result with the state 
laws inhibiting agricultural collectively. "With legal disabilities 
removed in this one direction comes the positive federal legis- 
lation aiding collectively in distribution by federal grain in- 
spection and the warehouse act. This law prevents personal 
monetary weakness from extending the depression down the 
line in matters of price by placing credit where it can serve all. 
From an economic physical standpoint the imperishable prod- 
ucts are reservoired on their way to consumption with in- 
creased gain to the producer and also to the consumer. 
• This assurance comes from profits in agriculture being used 
to increase production rather than diverting the gain there- 
from. An era of the widest demand for supplies for farm im- 
provement would stimulate trade if agriculture could have as- 
surance of stable prices for products. 



452 MARKETING AND FARM CREDITS 

Can Farmers Deal Directly With Consumers? 

Much of the discussion of marketing can be avoided by the 
knowledge that not to exceed 17 per cent of agricultural prod- 
ucts are susceptible of direct sale from producer to consumer. 
The great staples like grains, sugar, hides, wool, cotton, to- 
bacco, meats, et al must be manufactured or processed before 
u^ed. The preserving of milk, vegetables and fruit, for exam- 
ple, even greatly reduces the percentage of direct selling 
pointed out as possible. A limited knowledge of marketing 
problems devotes over-much time to this very limited field. 

The values or prices of commodities which must be manu- 
factured or processed are in fact made by the buyer to 
the producer on the basis of supply and demand as viewed 
by him. This view is in fact not the real supply and 
demand, but a magnified supply and a minimized de- 
mand, for the purpose of personal gain when buying and 
the reverse view when selling. Out of these kaleidoscopic 
viewpoints comes specualtion. When the farmer has wished 
to name a price on his product, he has been obliged to 
cloak his dependence with a phrase and escaped with a de- 
gree of self esteem that dulled the pain of financial loss. That 
phrase is the so-called law of "supply and demand" making 
the price. There is, however, no such law but a relation, since 
supply and demand are but two views of the same thing and 
when these views differ and the power of superior knowledge 
or ability to control lies with the buyer, the adage affords only 
consolation to the producer. 

If cooperative movements deny themselves, or by reason of 
timiditj^, fail to possess themselves of the power now a legal 
right to interpret supply and demand from their viewpoint, 
little advance over that of the individual is shown in their po- 
sition. 

Cooperation Must Charge for Service 

If cooperative enterprise must exist only for improved or 
cheapened distribution and cannot charge for this service, or 
name compensatory prices, it is of value only to those who 
reap where they did not sow. If cooperative distribution is 



J. N. McBRIDE 453 

but an improved machine or cheapened method of disposing 
of goods, it comes in the final analysis to be like improved ma- 
chinery or as a more productive variety of seed reduces the 
cost of products, and is of little gain to the producer. 

Without assuming the power of interpreting supply and de- 
mand, now legally conferred, cooperative organizations in- 
tended to make agriculture more profitable assume the posi- 
tion of an accelerant to production or the old idea of '^making 
two blades of grass to grow where formerly one grew," in- 
stead of making the hitherto blade more profitable in market- 
ing. The inevitable result of non-basic operations in fixing 
the prices while the basic industry of agriculture does not, is 
seen in the following account which actually occurred: 

Two men sat in a smoking compartment of a Pullman car 
running through Indiana. 

"Well, Tom," said the first, "I lost 12 of my best machinists 
last week again." 

"What was the matter?" 

"They all went over to work in the munitions plants at 
Dayton, 0., where they can earn from $6 to $10 a day. We 
can't pay those wages in a silo factory." 

"What did you do to fill their places?" 

"I went out into the country and kidnapped a lot of farm 
hands. I've got a regular school in my plant now for teaching 
these green men to run my automatic machines. But as soon 
as they get to be any good they quit and go over to draw the 
big wages offered by the munition plants. ' ' 

"But what do the farmers do when you steal their hands?" 

"They do without, I guess." 

The answer to what occurred is, a quotation from the Michi- 
gan crop report for June, 1916. 

Monroe : Bedford twp. — Owing to scarcity of help consid- 
erable land will not be worked this year. 

Why Basic Industries Should Be Conserved 

Basic industries like agriculture and mining, which make 
additions to the world's wealth from the earth, must possess 
the power of compensatory production for upon these bases 



454 MARKETING AND FARM CREDITS 

are all other industries. The failure of compensatory produc- 
tion undermines others dependent upon these bases. The Bos- 
ton and Cleveland chambers of commerce investigated their 
respective milk supply and found the supply diminishing with 
loss to the producers, and to all concerned. The bear raid 
on live hogs in 1907 was followed by over-high prices of pork 
with diminished car receipts by the railroads for several suc- 
ceeding years. 

One of the most interesting trade laws is that of Denmark, 
passed in 1912, which authorizes the chief organizations of 
Danish industry (The cooperative producers), to file with the 
commissioner of navigation and industry the size and form 
and uniformity of product which they will sell to the trade in 
original packages or designations and upon which these pro- 
ducers mark the retail price. A fine is provided for any dis- 
tributor who sells at a less price than marked thereon. This 
law has placed price-making with the producer upon a com- 
pensatory basis and also educated the consuming public to 
buy standard quantities and qualities. (Copies of this act will 
be supplied on request.) Organizations now cooperate in sel- 
ling instead of competing against each other. 

What the Milk Men Did 

As a mathematical proposition the competition of cooperative 
organizations neutralizes cooperation and is little advance over 
individual industrialism. The insistent urging of cooperation 
as a theory in the United States and the very general apathy of 
farmers here as compared to continental Europe is thus easily 
explainable — not in the character of the farmer but in the 
character of the cooperation. The inability of many coopera- 
tive enterprises to affect, prices in the United States was be- 
cause they lacked the European essential qualities which com- 
mand respect and make for profit. The most successful 
cooperative movement of this yeav was the Illinois Milk Pro- 
ducers who fixed milk prices as follows: April, $1.65; May, 
$1.45 ; June, $1.25 ; July, $1.55 ; August, $1.70, and September, 
$1.70 per hundred weight of 3.5 per cent milk. The increased 
prices received by the Illinois dairymen for these six months 



J. N. MoBRIDE 455 

is estimated to be $1,500,000. The same cooperative methods 
fixed the prices for the winter months at $2 per hundred. 
The gain to the Illinois dairymen is estimated for the year to 
be $3,500,000. 

President Hull of the Michigan Milk Producers' Association, 
estimates the gain already accomplished as an addition of 
$8,000 per day to the dairy farmers of this state. 

The Michigan bean groAvers have for the last two years 
exerted a remarkable influence in production and informing 
the growers of supply and demand of beans, and interpreting 
in terms of price which would move the crop and compensate 
the grower. 

California is one of the advanced states in matters of price- 
making. The following official announcements are of interest 
to the producer as well as the student of economics. 

Fixing The Price Of Canning Peaches 

The Tulare County Canning Peach GroAvers' Association was 
organized at Visalia during the first week in May. Mr. Frank 
Lanning was elected president. An agreement was drawn up 
by which members of the association will demand the follow- 
ing prices: For Tuscan clings, $35; Phillip clings, $32.50; 
Orange clings, $30; Lovell freestones, $25; Muir freestones, 
$22.50. 

The members control 7,000 tons of peaches and they have 
been assured that Southern California Packers will purchase 
at least 8,000 tons of peaches in Tulare county in order to 
make up for a shortage of crop in Southern California. 

Prices For 1916 Crop of Raisins 

During the last week of April the California Associated 
Kaisin Company issued the opening price list on 1916 layer 
raisins. The price list is as follows: 

Three-Crown London Layers, 20-lb. boxes, $1.30; 
4-Crown Clusters, 20-lb. boxes, $1.60; 5-Crow^n Doshea 
Clusters, 20-lb. boxes, $2.25 ; 6-Crown Imperial Clus- 
ters, 20-lb. boxes, $2.75 ; 5-lb. boxes, 50 cents addi- 
tional; 10-lb. boxes, 35 cents additional; Fancy Clus- 



456 MARKETING AND FARM CREDITS 

ters, 1-lb. cartons, 20 to case, $1.75; Fancy Clusters, 
2-lb. cartons, 12 to case, $2.10; Fancy Clusters, 5-lb. 
cardboard cartons, 4 to case, $2.25; Bulk Layers in 
50-lb. boxes, $2.75 ; Bulk Layers in 100-lb. boxes, $5.00. 
Prices guaranteed against decline to January 1, 1917. 
The economic justification is that production must be made 
compensatory or, it will decline with industrial losses to all. 
The first principles of banking are that loans to be safe, must 
be used for productive purposes. Agricultural organizations 
which do less than this are delinquent in their support of good 
banking methods. When the crops are secured or known in 
part or whole, agricultural organizations should express their 
interpretation. The contribution to business success that the 
Standard Oil Company made to the world was its ability to 
name the price it would pay for crude oil. The greatest benefit 
that agricultural organization could do for both producer and 
consumer would be to assert its poAver to make farming com- 
pensatory and in that way increase production. This is the 
protective tariff idea applied to agriculture. ' ' The penny saved 
is a penny earned" is an agricultural maxim due to the dis- 
card. The emphasis on saving as the way to succeed has made 
farmers penurious. Agricultural organizations that have 
sought trade advantages below a legitimate profit have made 
the mistake of trying to gain their point by leveling others 
to their own economic status rather than to seek the higher 
position of equality in industrial action. Much of the criticism 
of cooperative movements as well as actual hostility came 
from trying to save on wages and costs, below the established 
standards of business. Economics calls this destructive com- 
petition. Calif ornians describe it as "Orientalism" and per- 
haps the present ideas of cooperative price-making in that 
state is an effort to shun that name, with all that it implies. 
One reason for failure of agricultural determination of values 
of its product is that merchandising, manufacturing and dis- 
tribution in general have more nearly control ol output, and 
can convert a low base price of raw material into a product 
which can be stored or held. The beginning of the packing 
season means lower-priced hogs as a rule. 



J. N. MoBRIDE 457 

A Way To Destroy Futures Trading 

Instead of inveighing against speculation and asking • for 
legal prohibitions thereof, the cooperative determination of 
prices by agricultural organization would be the most effective 
weapon for its suppression. So disastrous has been future 
selling with the Michigan bean jobbers since the growers or- 
ganized and established a price minimum, that this, one of the 
strongest producers' associations in the United States, proposes 
to withhold all sanction of future selling before the crop is 
secured. Merchandising is the service given in moving pro- 
duets with legitimate compensation. Speculation is the attempt 
lo capitalize power rather than more products. It is the re- 
possessing themselves of this power with the purpose of using 
it for mutual service of all, agriculture is seeking and must 
have. 

The correct economic and ethical method of Agriculture is 
to interpret supply and demand after the volume of product 
is approximately known. Limitation of acreage or supply is 
not to be considered. It is to avoid these two views each equally 
in error and nationally destructive, that such a program is 
intended. The first view is that agriculture should seek smal- 
ler crops, because the smaller crop is often the most profitable. 
The December report of the United States Bureau of Crop 
Estimates states that the volume of money for the diminished 
crops of 1916 is greatly in excess of that of previous or normal 
years. The individual producer who has had a large or normal 
crop has profited but the sub-normal yields of others has made 
this possible. The other and more dangerous view yet less un- 
derstood is that maximum crops and high average yields which 
produce some surplus permits or compels crop production at 
a point below adequate compensation. The feast that the far- 
mer has provided is shared at a loss to him; other indus- 
tries have means to make prices stable. It is fate's irony 
that the farmer's skill and labor, cooperating with natural 
resources, makes him provident of all and his providence be- 
■comes the cause of his losses. 



458 MARKETING AND FARM CREDITS 

Economic Place of the Farmers 

Bulletin Number 746 issued by the United States Depart- 
ment of Agriculture notes that the income of the farmer, for 
his labor, and superintendence is less than any other occupa- 
tion except that of the factory worker and employees of tele- 
phone companies Avhich industries include women and minors. 
The incomes of salaried employees of factories, street railways, 
patrolmen, federal employees, telephone companies and clergy- 
2nen averages around $400 more than the average earning of 
farmers. The farmer, after calculating the interest due him 
on his property, receives for his labor $200 and an allowance 
of $400 more for produce consumed on the farm. Mr. Reed,, 
the farm management investigator of Michigan, found that 
96 farms investigated in 1915 for the previous year a labor 
income of $393. This was less than the earnings of farm 
laborers. The 10 best farms investigated showed a labor 
income of $828 or about the earnings of the average federal 
employe. That is, the best farmers were scarcely equal to the 
average of all federal employees. In other words, after a 
generation of agricultural education and the expenditure of 
millions for agricultural advancement and efforts of farmers' 
organizations, there is no financial inducement to offer for men 
to put their time and talents into farming. Boj's leave the 
farm for the reason that the compensation is inadequate to 
that of other vocations. The city and its industries is the 
great Ford plant, with its high wages, against which the farm 
cannot compete. If it needed any additional proof, the enorm- 
ously increasing city population as compared to the country 
is but another way of expressing the fact that there is a demand 
from both city and country for labor, and that the city indus- 
tries are able to outbid the country. With this comes the 
increasing cost of living; and agriculture, below the point of 
efficiency, is unable to produce economically. 

The superficial and thoughtless advices are that agriculture 
should increase its efficiency, and also products at the same 
time. Being unable to compete for labor in the present market, 
increased production is out of the question. Capital and labor 
go elsewhere. The economics of agriculture has as yet, not 
been written, as being a coordination and cooperation of indus- 



J. N. McBRIDE 459^ 

try with other lines of life. The individual farmer is much 
like ]\[aeterlinck"s one honey bee, unable to make honey. If 
the farmer associates into an organization, what are the possi- 
bilities and limitations of, and functions that his associated. 
activities will be made of service, is a proper question to ask. 

What Little Denmark Is Doing 

The Danish method alloAvs the producers to meet their 
changing conditions from their own viewpoint, rather thaix 
from that of the speculative buyer. A successful corner on 
any product in the modern business world and getting there 
first is the correct estimate of supply and demand. The laws 
of the German Empire forbid futures options and by govern- 
mental control strives to make prices to the producer com- 
pensatory. In this the German Empire has doubled all the 
great agricultural products in the last 20 years. 

Agricultural maxims of "greater crop yields," "improved 
methods," and "increased efficiency," fall short of leaving 
the rewards with those who practice the precept. And this, in 
turn, defeats the advice, however well meant. As a concrete 
example, a leading dairyman of Michigan saw nine different 
milk wagons serving customers in the same block in one of 
the smaller cities of Michigan. "Whatever efficiency even to 
the highest degree of the producer, was being defeated by the 
wasteful methods of distribution and the low price paid for 
product prevented expansion of dairying, as long as the dis- 
tributor fixed the price to the producer and consumer. An 
organization of producers using the power of adequate price- 
making would have decreased the number of distributors and 
increased production. Much of the high cost of living 
is duplication of services. In Denmark price fixing 
decreased the number of distributors and increased the vol- 
ume of business, done by those who remained in trade and also 
the total of agricultural production. 

The world has stood in amazement at the super-ability of 
the German Empire to feed itself during the war. The Impe- 
rial Chamber of Agriculture or Landwirtschaftstrat, consist- 
ing of 73 men, with headquarters at Berlin, connected with the- 



460 MARKETING AND FARM CREDITS 

state and local chambers of agriculture, was and is the coordi- 
nating power of compensatory and systematic agriculture. 
Storehouses for the imperishable products are part of the 
system. Supply and demand are the prime features of the 
Imperial Chamber of Agriculture. Advices collected from the 
bottom up, digested and assimilated, are disseminated from 
the top down. The interpretation of supply and demand is 
from the producers, by them, and for the benefit of the whole 
nation. Tariffs are raised or lowered, bounties given, and 
every resource employed to maintain agriculture. The food 
supply is declared a matter of national concern and the one 
prerequisite is to pay the grower to make this provision. Den- 
mark, through the action of the trades law of 1912, invites if not 
compels . agricultural organization to interpret supply and de- 
mand in terms of price. 

The necessity of organization of the agricultural industry 
of the United States for some time has been apparent. There 
is no unity of purpose. Existent organizations are largely 
local, at least not exerting the maximum of influence. Nor 
does there seem to be a necessity for adding to their number. 

A Plan For Nationalizing Agriculture 

The following plan is submitted for a National Board of 
Agriculture, with headquarters in Chicago, and perhaps sub- 
sidiary local office headquarters at points of special production 
and at Washington. 

Affiliate the following and additional organizations: viz. — 
such bodies as the National 

Grain Growers, 

Livestock Growers, 

Milk Producers, 

Cotton Growers, 

Tobacco Growers, 

Potato Growers, 

Others. 
Let these bodies choose and finance the national body. The 
duties of this body would be to ascertain and interpret supply 
and demand in terms of price from the producers' standpoint 



J. N. MoHRIDE 461 

of adequate compensation, united with the added consideration 
of moving the crop. 

The consumer would share in the benefits of a large crop 
but not at the expense of the producer. The livestock grower 
would know that he could finish his product to the maxim of 
weight and the grain grower increase his yield and that others 
would not reap where he had sown. 

The board of agriculture's price advices would allow the mid- 
dleman to perform his service without compelling him to tie- 
come a speculator. The miller could sell flour without "hedg- 
ing" by basing quotations for flour on board of agriculture 
prices. Business would be stabilized and the opportunity for 
speculation gone. 

The judgment of trained men as to the equities of price would 
hav6 the support of the producer who could with his concur- 
rence and this determined by self interest, correct errors by 
price maintenance until all were given an opportunity for a 
change. The commercial world would look to a trained equi- 
table price judgment from the producers of agricultural pro- 
ducts just as it has accustomed itself to the price level ex- 
pressed by other industries who assume this function and do 
not tolerate the buyers' price for his product. While this 
transference of price making from the buyer to the producer 
may seem revolutionary, it is the rule in other industries. The 
present condition of American agriculture is the result of this 
power being assumed outside of the producer. That this power 
M^ould not be used oppressively is seen in the fact that the 
Michigan bean growers have for the past two years made a 
lower minimum price than that to which the buyers have 
pushed the market. 



462 MARKETING AND FARM CREDITS 



THE UNIFICATION OF AMERICAN AGRICULTURE 

Carl Schurz Vroomax* 

The remarks of our chairman about the ladies reminds me of 
the story told of a man who bragged a good deal about his wife. 
He insisted that he had a perfect wife and as he was always 
talking about having a perfect wife, finally his friends got tired 
of it. They had good wives of their own and did not like to 
Jiear his wife talked about all the time. So they said to him, 
"Look here, we know that you have got a mighty good woman. 
You have a better woman than you deserve, by a good deal, 
as most of us have, but she is human like all the rest of our 
wives. She has made her mistakes and we do not like to be 
hearing all the time what a perfect wife she is. Now just sit 
down here for five minutes and think. You have been married 
several years. See if you can not recall something she has done 
that is not to her credit, something you would have preferred 
otherwise." He thought for five minutes and then said, "No, 
^he is perfect. As I said before, she is perfect. But," he said, 
"there is one little matter I would just as soon see changed. 
As a matter of fact, w^hen she is drunk she swears." 

Now, the agricultural problem always calls to my mind the 
story of the old colored man to whom a white man owed some 
money. When he went around to collect it the white man said, 
"I am sorry, but I have not got the money. I will have to give 
you a check." The colored man said, "I don't know nothin' 
'bout dem checks. I'd rather have the money." "Well," said 
the white man, "I told you that I haven't got the money. I 
wall have to give you a check and you can take it down to the 
bank and get the money from the cashier." Eeluctantly the old 
man took the cheek and went down to the bank. Truly enough 
there were a lot of people standing in line handing in checks 
and getting out money, and he took his place in line, but just 
as he got to the window the man inside pulled the window down 



* Mr. Carl Schurz Vrooman is a farmer of Illinois, who at the pres- 
ent time occupies the post of assistant secretary of the United States 
Department of Agriculture, Washington. D. C. 



CARL SCHURZ VROOiVIAN . 463 

and said, "We are very sorry, but this bank has suspended pay- 
ment." "What's de matter?" asked the old darkey. "Ain't 
you got no mo' money in dar?" "Yes, we have a lot more 
money in here, but the bank has suspended payment," was the 
answer. "Ain't Mr. Jones got no mo' money in dar?" 
"Yes! Yes! but as I've explained repeatedly the bank has sus- 
pended payment. Don't you understand what that means? 
Have you never heard of a bank busting?" "Yas, suh, " re- 
plied the old man, "suttinly ! suttinly ; but dis is de fust bank I 
ever had to bust plum' in my face." 

The Life of Things Unexpected 

Now, no man ever farmed very long who has not got accus- 
tomed to having things ' bust ' in his face. For example, a couple 
of years ago I put a lot of phosphate on some land down in 
Champaign county, Illinois, and ploughed under a lot of clover. 
I got 4:iy2 bushels of wheat to the acre, but just the day before 
I threshed, a cloudburst washed away most of my wheat. Some- 
thing had ' ' busted in my face, ' ' and I was up against that great 
primeval problem of the farmer, single-handed, fighting his 
battles against the hail storm, against drouth, against insect 
pests and also against something which is worse than any of 
these, for from time immemorial the farmer has conquered all 
of these, that is to say, against the malevolent power of human 
greed, which man never yet has been able satisfactorily to con- 
quer. This is our greatest problem, and until during the past 
three or four years this is the problem that the farmer has been 
left to face alone and single-handed. 

For 50 years the United States Department of Agriculture 
has taught us how to fight the chinch bug, the army worm, the 
boll weevil and all insect pests ; how to fight drouth, and how 
to come out a conqueror, but until within a few years it has 
never taken thought to solve for the farmer his economic and 
business problems. 

I can remember when I was a boy out on the plains of Kan- 
sas, we used to have the locusts or grasshoppers come in by 
millions and eat up every green thing there was in that whole 
fair region. But this only happened once in a few years. And 



464 MARKETING AND FARM CREDITS 

then occasionally we would have a drouth. I have seen corn 
as high as my shoulder, as beautiful, as green as any that ever 
grew under God's sky, and the hot winds came up from the In- 
dian Territory and Texas and burnt it to a crisp within 24 
hours. 

When One Dies of Mortgage on the Heart 

This happened only once in a few years, but every year and 
all the time, during that period, another enemy hovered over 
us, hung over us like a pall — the mortgage, with a high rate 
of interest. More farmers' wives died of mortgage than of tu- 
berculosis and cancer combined, and more farmers' wives went 
to the madhouse from mortgage than from all other causes com- 
bined. The farmers appealed to Congress for help. They 
formed the Grange, a powerful organization; they elected state 
legislators; they petitioned Congress. They said, "Give us 
help. We need more money. We need money on longer time 
and on easy terms of payment, and at lower rates of interest." 

What did Congress say? They said, "This is paternalism; 
you must stand on your own feet." And all the time Congress 
was helping and practicaly subsidizing the big industries in the 
East. Then the Farmers' Alliance was formed and did much 
the same things that the Grange had done. They petitioned 
Congress and they even formed a political party, the Populist 
party, and they sent congressmen and senators to Washington 
who said, "Let the farmer have help in solving his financial 
problems. He is as much entitled to help as are the Avealthy 
manufacturers in the East." 

Congress not only spurned their proposition, but laughed at 
their doctrines as "hayseed socialism," populism, and pater- 
nalism. It is only this year, for the first time in the history of 
this country, that Congress has passed a great financial meas- 
ure, the Federal Farm Loan Act, primarily in the interests of 
the farmer. This same Congress has passed a lot of other laws 
along the same line; the bonded warehouse act, the cotton fu- 
tures act, the good roads bill and all the rest. What do these 
laws mean? They mean that at last the farmers' interests are 
being taken into account. 



CARL SCHURZ VROOMAN 465 

The Noblest Work of the Department 

Perhaps the biggest thing that the United States Department 
of Agriculture has done recently was to create and organize 
the bureau of markets. The bureau of markets has been criti- 
cized by some people because it has not accomplished its life- 
work during its teething period. I knoAv that it has not solved 
all problems of the farmer. I did not expect it to do so in two 
years, and I do not expect it to do so' in the next two years. 
But for the first time in our history the federal department of 
agriculture has a bureau of markets and has plenty of money 
with which to hire experts to work on all the problems that 
the farmer has to face in his fight with the usurer, the fake 
middleman, the transportation shark and the other human pests 
that feed off the profits of the farmers' business dealings. For 
the first time the federal department of agriculture is attempt- 
ing to chart the treacherous seas of the economic and financial 
world for the farmer, to point out to him reefs and shoals upon 
which tens and hundreds of thousands of his fellows have met 
shipwreck in the past, and to indicate to him safe channels, to 
the haven of a successful farm business. This is no small af- 
fair. It is an epoch-making performance. 

At last the statesmen of this country have learned something- 
from the farmers' organizations, and I want to congratulate 
the farm organizations of the country because the members of 
these farm organizations and their fathers and those who went 
on before them were the pioneers who blazed the way and 
made a path along which the federal government at last is 
building a broad highway for human progress. 

If I had the time and the power to tell you or even to hint 
to you what is involved in all that has recently transpired for 
the benefit of the farmer, you would agree with me that it is 
one of the greatest events in the history of this Nation — more 
important than many great battles that have been fought on 
bloody battlefields. Something constructive, creative, has taken 
place in this country. The great agricultural classes have been- 
taken into account. These people who for thousands of years 
have been the foundation of all human society, at last are being 
met half way by the l?.tv makers, by the statesmen, by the econ- 
omists, by the press. And interesting as all this is, it is only a 



466 MAiRKETING AND FARM CREDITS 

beginning. Just a beginning, that is all, and to you and to me 
and tO| all the farmers in this country who are interested in 
this great problem, the call comes tonight to make the achieve- 
ments of the past our starting points, not our goal. 

Solving the Unsolved 

There are a score of unsolved problems that Congress has not 
«ven touched so far. Moreover, most of these beneficent laws 
that I have spoken of will probably have to be amended in 
minor details. The work that lies before us is big, not only big 
T^ith difficulties, but bigger 3^et with promise. What are we go- 
ing to do about it ? Are we going to meet the difficulties of the 
future in the same way as we met them in the past? I hope 
2iot. To judge from these splendid Conferences that have been 
lielcl here, I think not. I believe there is a new spirit, not only 
among our lawmakers and economists and other men in the 
cities, but a new spirit among our farmers. What is this spirit? 
It is commonly called the spirit of cooperation. 

People have wondered sometimes why the cooperative move- 
ment has made so little headway in this country. In the past 
I squandered a good deal of money, at one time and another, 
trying to found cooperative institutions. I had .a brother who 
squandered a great deal more than I did, and I know there are 
many other people who have done the same. This money was 
not wasted. It taught us one thing, that you can not have a co- 
operative movement without cooperators. 

A National Plan of Action 

There are a great many different ways in which we can work, 
and I have not time to outline them to you tonight in any de- 
tail. We in the department of agriculture are doing our work 
to the best of our ability; the state agricultural colleges and 
state departments of agriculture are doing their work. Farm- 
■ers' organizations are doing and for a long time have been do- 
ing their work, and new organizations, like that described by 
the previous speaker, are springing up in an effort to bring 
some sort of coherence and order out of the chaos of the past — 
an attempt to take our scattered efforts and unify them until 



CARL SCHURZ VROOMAN 467 

they become irresistible. Can we do this ? Does anybody doubt 
that we can do this? We have the United States Chamber of 
Commerce; we have an American Federation of Labor, and 
who among the farmers is a doubting Thomas, who among the 
farmers has any doubt at all about the ability of the farmers 
in this country to create a great national organization as power- 
ful as either of these and that will once and for all time put the 
farmer on the map? 

But after you have done this you will have just started. 
After the farmer is on the map, then, as our chairman has said, 
the farmer must learn to cooperate with the city man. We 
must cooperate with the United States Chamber of Commerce, 
with the American Federation of Labor, with all of the other 
organizations which represent the producers of this country. 
There is only one real antagonism in this country that is at all 
fundamental, and that is the antagonism between the producer 
on the one hand, and his exploiter on the other. The farmer 
has only one enemy, and he has many friends. Every honest 
producer of wealth in this country is the farmer's friend, I 
care not what may be his profession or trade. 

The farmer, after he has organized himself in a gigantic or- 
ganization, then should go out looking — not for enemies, for if 
you look for them you will find them ; you will create them by 
your own suspicion and distrust. He should go out and look 
for friends. He will find them on every hand, first of all be- 
cause he is the greatest producing power in the country ; and 
second, because, being organized, it will be much wiser to be 
his friend than his enemy. Everybody is the friend of the 
powerful. Few are the friends of the weak. So it is the first 
duty of the farmer to become powerful, powerful through or- 
ganization. He is powerful now in a disjointed, disorganized 
way, but his power is more potential than organized. What 
we want is to make the force of the farmer more and more no- 
ticeable in our national life. I believe that in more ways than 
one the farmer is the hope of the country. The farmer, as some 
one has said, is the only man in the community who works in 
direct partnership with the Diety. I told some farmers the 
other day that the United States Department of Agriculture 
would like to be a third member in this firm. We are willing to 



4g8 MARKETING AND FARM CREDITS 

take in some other members. We are willing to take in as 
members of this firm every producer in this country. "We want 
to draw the line clearly. "We want to make a deep line of de- 
markation between the producers and the parasites. That is 
the only real division that honest men ought to make in this 
country in the industrial, economic or financial world. All talk 
about minor matters is dust in your eyes. 

When, however, you have once made this fundamental dis- 
tinction, you have got to work out efficient methods. But the 
methods come second. We have got first to understand what 
the distinction is, and, after the farmers have organized them- 
selves in order to solve their problems, we must then make an 
organization of all the producing classes in the country. These 
producing classes must take charge of the country. The men 
who create the wealth must have the wealth. Moreover, the 
men who create the wealth are the men who have the brains, the 
character and the will power that will enable them to dominate 
the Nation and to build up here a higher civilization than any 
that has ever been known before. 

The Farmers' Dream of Dreams 

I believe that in this work it is the farmers that must take 
the lead, because after all, life in the country is most conducive 
to largeness and sameness of view. At certain periods of the 
j^ear the farmer has more leisure than most other classes and 
fewer movie shows to go to, and therefore he has more time for 
reading and thought. I expect the cooperative movement in 
this country to get its greatest impetus from the farmers. I 
expect the farmers to take the lead. I do not mean that they 
a,re to take the lead in cleverness. City people are perhaps 
cleverer than we are in many ways, and that is Avhy in the past 
they have had the direction of things in this country. But I 
find that even among the city people there is a new spirit. I 
have spoken before chambers of commerce, state bankers' asso- 
ciations and other business organizations, and I find that the 
business men in this country are coming to recognize the fact 
that their success depends upon the farmers' success. And 
moreover, they have not retained the old idea that some of them 
used to have, — they do not regard the farmer any more as the 



CARL SCHURZ VROOMAN 469 

farmer does his sheep, as creatures to be sheared and occasion- 
ally to be skinned. They are coming to regard the farmer as a 
coworker with themselves. Most of them are willing to help 
build up the farmers' prosperity. The farmer and the busi- 
ness man are tied together and dependent upon each other in 
the development of any real or enduring national prosperity. 

The Larger View of Things 

It is possible for men by predatory processes to go out and 
grab something from other men. There are people in every 
state in the United States who are doing this; pickpockets, cut- 
throats, thugs and crooked financiers. But the men who have 
larger ideas, who want to build up larger institutions than 
crooks can possibly build up, the men who want to create great 
enterprises, the creative minds of the business world, the 
younger generations, are coming to see that the way for the dif- 
ferent elements of this country to get rich is not by fraud, not 
by exploiting each other, but by uniting their energies to ex- 
ploit Mother Nature more successfully. 

This is the keynote to the economic thought of our present 
day, and the business men are getting it as well as the farmers, 
I do not pretend to know what the practical results of this Con- 
ference are going to be. Somebody here today seemed to think 
that we have had a good deal of "loose talk." He seemed to 
think that the chief result of these Conferences was the mere 
passing of a lot of good resolutions. But I am convinced, this 
man did not get beneath the surface. Underneath the surface 
I feel here something bigger than resolutions; an emotion that 
is bigger than any expression of that emotion that has been 
made by any of the men who have talked. I feel here a great 
dynamic force that is going to reach out all over this country 
and influence men in every walk of life. I feel that here is 
coming into partial expression a demand on the part of the 
farmers and other producers for a new type of business enter- 
prise. The farmer is a business man if he is anything at all. 
If he is not a business man, he is generally a failure. The 
farmer is becoming a different type of business man from what 
we have been accustomed to and he. is going to create on the 
farm and in the rural community a new type of civilization. 



470 MARKETING AND FARM CREDITS 

"The Evidence of Things Unseen" 

This is what we see dimly. We feel it ; we apprehend it by 
the eye of faith. But we are working, believe me, those of us 
who are working in this movement, as were our fathers and 
those who went before them — we are working for something 
bigger than larger profits or dividends. "We are working to 
bring into being a new type of civilization. And if we will keep 
that to the forefront, if we will keep the vision of a greater na- 
tional future ahead of us, a future based upon the cooperative 
spirit, a future based upon a spirit of patriotism which not only 
finds expression on stated occasions, but in our everyday deal- 
ings with our neighbors, in the country as well as in the city; 
if we farmers will make this our dominant motive in this work^ 
then we are launching something that is bigger than any of us 
realize. 

I trust that we will never lose sight of this great ideal, an 
ideal which would be great if we could not realize it, but which 
happily is entirely practical, and which we all can help to bring 
into realization. 



A NATIONAL SERVICE INSTITUTION FOR 
FARMERS 

Charles A. Lyman * 

The first two Conferences on Marketing and Farm Credits 
strongly emphasized the necessity of fostering cooperative or- 
ganizations among farmers. The third Conference last year 
unanimously endorsed a plan for the creation of an agricultural 
society that could attack the problems of rural life in a method- 
ical and authoritative manner. In accordance with the Confer- 
ence resolution President McVey appointed a committee of 10 
who drew up the constitution and bylaws of the National Agri- 
cultural Organization Society. 



* Charles A. Lyman, a university trained farmer of Rhinelander, 
Wisconsin, is general organizer of the N. A. 0. S., with headquarters 
at 340 Washington Building, Madison, Wisconsin. He has done con- 
siderable field and research work both in America and Great Britain. 



CHARLES A. LYMAN 471 

Over 14,000 printed copies of these have heen sent out through 
the mailing lists of the secretary of this Conference, together 
with an equal number of pamphlets written by i\Ir. Holman; en- 
titled "First Aid to Farming Business." The response to this 
publicity has been gratifying, and farmers or farmers' asso- 
ciations have written in to the central office at Madison, Wis- 
consin, from nearly every section of the country, requesting 
information and assistance. The number of associations that 
have applied and been admitted for membership comprise in the 
neighborhood of 30,000 farmers. 

It is not my intention at this time to go into a detailed ex- 
planation of the plan of organization or the procedure of the 
N. A. 0. S. The constitution and bylaws and the descriptive 
pamphlet by Mr. Holman will form a part of the published pro- 
ceedings of this Conference, and thus be available to all. Let 
me point out, however, some obvious advantages possessed by 
the N. A. O. S., and which, under the plan adopted, are open to 
all other farmers' organizations in this country. 

Advantages of N. A. 0. S. 

In the first place the N. A, 0. S. is not hampered by tradi- 
tions or by past misfortunes. It begins its career at a time 
when there is an unprecedented demand for skilled help in 
forming nearly every type of business organization among- 
farmers. It is like a government which having in the past pur- 
sued a policy of unpreparedness can profit by the mistakes of 
other nations and concentrate its attention on submarines, aero- 
planes, Lewis guns or whatever the experience of warring coun- 
tries has showm most effective in modern warfare. The N. A. 0.. 
S. in selecting its working force has naturally attempted to se- 
cure the services of men who are familiar with the farmers'" 
problems. It has picked no dark horses w^hose course of action 
would be problematical but it has secured the services of men 
who in the past as in the present have stood for "sound projects.. 

Secondly, every possible facility has been given the working 
committee to carry on its work. At IMadison there are four- 
great libraries, two of which are particularly rich in coopera- 
tive material. The supreme court and reference libraries make- 



472 MARKETING AND FARM CREDITS 

it possible to keep in closest touch with nation-wide and inter- 
national legislation and all court decisions germane to the sub- 
ject of agricultural cooperation. The files of the preceding Con- 
ference on Marketing and Farm Credits containing the bylaws 
of many successful associations and letters from farmers, edu- 
cators and noted men from all over the world form a very val- 
uable adjunct to the material constantly being collected by the 
N. A. 0. S. 

Thirdly, the friendships and personal connections made by 
the general and working committees give a wide opportunity to 
promote satisfactory working relations in practically every sec- 
tion of the United States, 

Available, then, to every group of farmers is this central of- 
fice of the N. A. 0. S., where reliable information affecting the 
organization of agriculture can be secured and from which field 
workers can be sent to directly assist in organizing creameries, 
-cheese factories, livestock shipping associations, warehouse com- 
panies, etc. Without a single exception the N. A. 0. S. has 
stood and will continue to stand for the organization of such 
associations upon the one-man one-vote basis and patronage 
■dividend plan. The joint stock plan of doing business has been 
found unsuited to the business of farming. 

Connecting New Associations with Going Concerns 

Having assisted a community to organize the N. A. 0. S. seeks 
to bring the local association into a close relationship with other 
associations of a similar nature. For instance, in Wisconsin all 
farmers' purchasing associations are advised to concentrate 
their bargaining power in the hands of Mr. H. E. Holmes, who 
is securing organized farmers wholesale rates on practically 
■every sort of agricultural requirements. Creameries and cheese 
factories are being assisted in like manner to federate and form 
butter and cheese "controls" for the purpose of improvement 
in quality, saving in operation and securing of better and more 
stable markets. And in a like manner cheese factories that are 
being assisted to federate are urged to affiliate with the Wiscon- 
sin Cheese Producers' Federation wherever such arrangement 
>can be made satisfactorily to both parties. 



CHARLES A. LYMAN 473 

Fighting- Fakerism in the Movement 

On the other hand the N. A. 0. S. has taken a firm stand 
against what it considers a very harmful situation and one that 
it believes is deeply injuring the good name of cooperation. 
Professional promoters have been allowed to enter the move- 
ment, and with little regard for the success of these enterprises 
have sold shares of stock in cooperative packing plants and other 
large undertakings and have exacted a toll of from 15 to 20 per 
cent of the capital stock. In Wisconsin alone the farmers have 
paid out to these promoters the enormous sum of over $250,000. 
In addition to this tremendous drain upon both the pocket book 
of the farmer and the resources of the companies, the La Crosse 
packing plant is about to close its doors chiefly because of the 
excessive promotion price paid for a rundown plant and the 
spoiling of large quantities of meat through careless and incom- 
petent management. The loss probably amounts to $200,000. 
Four hundred and fifty thousand dollars to date then is a con- 
servative estimate of the price "Wisconsin farmers have paid in 
the last three years to promoters in commissions and actual 
losses due to a sense of unwarranted security which came from 
relying on the glib tongues of plausible salesmen. 

Little good can come at this time "after the horse is stolen" 
in pointing out that several of the men now connected with the 
N. A. 0. S. did all in their power to warn the farmers of the 
danger they were running, and that every business and ethical 
consideration demanded that the sale of stock should be carried 
on by the farmers themselves through voluntary committees or 
by expert business men over whom the farmers would have com- 
plete control. 

The situation is so serious in Wisconsin that a further state- 
ment for the information of delegates present seems necessary 
at this time. The N. A. 0. S. was created for the purpose of 
studying, investigating and reporting to its members matters of 
this very sort. 

The N. A. 0. S. hopes the day will arrive when cooperative 
packing plants are as numerous and successful as they are found 
to be in Denmark. It is exceedingly anxious that the coopera- 
tive packing plants in Wisconsin will be eminently successful. 



474 MARKETING AND FARM CREDITS 

It has offered its assistance to these plants and has been the 
means of bringing directors and officers of several of them to 
this meeting for the purpose of working out plans for safeguard- 
ing the cooperative packing industry in every legitimate way. 
At the same time the N. A. 0. S. believes that instead of having 
four packing plants in "Wisconsin, one of which is practically in- 
solvent, it would have been far better to have gone about the 
matter in a more careful manner and to have first federated the 
cooperative livestock shipping associations in Wisconsin and 
then to have financed one centrally located packing plant from 
the shipping associations. In other words, to have followed the 
plan so successful in the case of the Sheboygan County Cheese 
Producers' Federation, where the factories own the shares in the 
selling organization and, having determined their policies locally ,^ 
give the president of the factories full power to act in their be- 
half.* 

It is not impossible that sooner or later some such plan will 
yet have to be worked out. The greatest difficulty arises in se- 
curing a quorum to do business at stockholders' meetings owing 
to the large number of shareholders — 4,000 or 5,000 in some 
cases. Moreover, the professional salesmen have sold shares in 
many localities far removed from the packing plants. The vot- 
ing by mail, which is a provision of the "Wisconsin cooperative 
law, was clearly never intended to cover cases of this kind. In 
associations so large as these are the members can know little 
of each other and the danger of slate fixing in the election of 
directors creeps in. While this element of danger has probably 
not entered seriously into the situation thus far there is no cer- 
tainty that it will not do so at any time, and to the speaker 's own. 
knowledge a certain farmer Avho was in a representative capac- 
ity with a prominent farmers' organization was told he would 
be slated as a director of one of the packing plants if he would 
subscribe for a share of stock. Long distance voting and slate 
fixing by men directly upon the ground make a dangerous com- 
bination and do not spell successful cooperation. 



* Now the Wisconsin Clieese Producers Federation. 



CHARLES A. LYMAN 475. 

Safeguarding the Good Name of Cooperation 

It is not a pleasant task to call attention to matters of tllis 
kind and yet it is a duty that goes with the knowledge that comes 
from constant contact with actual conditions. The N. A. 0. S. 
while it is in existence will feel its obligation to the farmers of 
this country to safeguard in every legitimate and necessary way 
the good name of the cooperative movement. If it is to have 
any marked usefulness in this country it can not pursue a col- 
orless existence. It will be found at the front leading when^ 
there is none other to carry the farmers' banner, or aiding and 
supporting others when true leadershii^ already exists. 

Distinctions Between N. A. 0. S. and Tax Supported Agencies 

In discussing how the N. A. 0. S. was created and in giving 
you one or two concrete illustrations of the problems it meets 
with it has been assumed that you are familiar with the need for 
this service agency, and that no one confuses the scope of its 
work with "state aid" agencies. Sir Horace Plunkett has so 
admirably stated the functions and limitations of "state aid'.' 
and voluntary "self help" movements such as the N. A. 0. S., 
and his books and pamphlets have so wide a circulation among 
students of agricultural organizations that it seems needless to 
go into the matter at this time. 

But to briefly illustrate the difference between the work which 
the N. A. 0. S. is doing and that of the U. S. Office of Markets 
for instance, let us take a case where the department sends out 
a man to inform warehouse associations of the advantages of 
proper book-keeping, while the aim of the N. A, 0. S. is to pro- 
vide the book-keeper himself. Or where the department informs 
farmers that collective bargaining is desirable, while the N. A. 
0. S. sees to it that the proper arrangements are actually made 
and that farmers do get wholesale prices in feeds, fertilizers and 
seeds. The two movements go hand in hand and should assist 
and supplement each other. The instructor in the dairy school 
tells the students what principles are essential in a good cream 
separator — he confines himself usually to principles and for ob- 
vious reasons does not actually inform the student which sep- 
arator is the best. Assuming that there is one "best" separator 
on the market the "self help" movement which is working in 



476 MARKETING AND FARM CREDITS 

the interests of the farmers alone actually names the separator 
and if possible shows the farmer or his association how to buy 
it upon the most satisfactory terms. 

Duplication of Farmers' Organization 

Certain people in this country, doubtless with the best of in- 
tentions, but without a full knowledge of the subject, have de- 
plored the large number of organizations that already exist 
which are making a business of educating and organizing 
farmers and have attempted to minimize the need for the N. A. 
0. S. Aside from the Equity, Grange Farmers' Union and 
Gleaners there are few, if any, agricultural propaganda bodies 
that are attempting to help solve the problems of rural life. Yet 
in Germany, which is smaller in area than the state of Texas, 
there are five or more great federations of an authoritative na- 
ture. These are: 

1. The Imperial Federation of German Agricul- 
tural Cooperative Societies. 

2. International League of Agricultural Coopera- 
tive Societies. 

3. Raiffeisen Federation of Rural Cooperative So- 
cieties. • 

4. Landwirtschaftsrat. 

5. Bunde der Landwert. 

An Aid to Other Organizations 

It would seem that if all these powerful organizations can ex- 
ist in Germany, that here in the United States with so much 
larger a countrj^ in size, resources and population, there is both 
room and need for all of our American agricultural organiza- 
tions, and especially is there need for the helpful, scientific and 
authoritative service of the N. A. 0. S. For it is not the purpose 
of the N. A. 0. S. to supplant any other existing farmers' or- 
ganization, but on the contrary it offers the services of its organ- 
izers, its legal, reference and other departments to any of these 
organizations Avhich request its informational resources. 

The N. A. 0. S. believes that organizations such as the Grange, 
Equity and Farmers' Unions exist because. of social and economic 



CHAiRLES W. HOLM AN 477 

needs. It assumes that such organizations are on the right roadj 
and are seeking the regeneration of agricultural conditions in 
the United States, 

The N. A. 0. S. has to the farmers' organizations of America 
a function similar to that which an architect has to those who 
would erect permanent and satisfying buildings. Just as the 
architect deals with the structure of houses and the composition 
of the structure, so the N. A. 0. S. deals with the structure of 
organizations and the composition of such structures. Just as 
the permanency and stability of the structure must rest upon a 
permanent foundation of the first class, so the farmers' cooper- 
ative structures must rest upon sound basic laws. For that 
reason we not only are working to give our clients the best that 
we can in the way of structures, but we are also trying to make 
the basic foundations of the right kind. In such an undertak- 
ing the claim for your consideration which the N. A. 0. S. 
makes is the integrity of its purposes and the consistency with 
which its associates and employes carry out the higher ideals. 



FIRST AID TO FARMING BUSINESS 

Charles W. Holman * 

"We are organizing a farmers', cheesemakers' and butter- 
makers' advancement association and would like to have a 
model in drawing up our constitution and bylaAvs. Can you 
help us?" 

So wrote a Wisconsin farmer to the National Agricultural 
Organization Society on March 4, 1916. That letter, typical 
of many that come to the N. A. 0. S., was referred to a salaried 
organizer who is familiar with the butter and cheese industry. 
The organizer informed the correspondent that he had but lit- 
tle faith in the success of an advancement association which 
combined farmers with business men when their interests were 



* This paper by Charles W. Holman is reproduced from Circular 
No. 2 of the N. A. O. S. to answer many inquiries that come to Con- 
ference headquarters as to what the N. A. O. S. is doing. It is re- 
printed from The Farming Business of August 26 and September 2, 
1916. 



478 MARKETING AND FARM CREDITS 

not identical. He then ontlined the principal reasons why- 
farmers find it best to organize to do their own business. He 
also described the essentials in any farmers' cooperative trad- 
ing organization. 

In late April the correspondent reported that the farmers 
had held a meeting and had come to the conclusion that they 
should organize a cooperative association to ship livestock and 
general farm produce, and to purchase heavy farm supplies. 
How were they to go about it? 

By return mail the N. A. 0. S. advised the calling of a sec- 
ond meeting to canvass the matter more thoroughly, and sug- 
gested the selection of a special committee to undertake an 
investigation and to sell share capital. The N. A. 0. S. then 
promised to send an organizer to aid in completing the work. 

Nothing more developed in that community until the mid- 
dle of July when a letter came in with an application for 
membership in the N. A. 0. S., and word that the community 
had followed every direction and was now ready to complete 
their organization on July 20. 

True to its promise, the N. A. O. S. sent an organizer to this 
meeting. At that time the character of the association was 
determined. Since then the N. A. 0. S. has drafted the neces- 
sary articles of incorporation and the bylaws and has nego- 
tiated the incorporation of it under the cooperative law of 
Wisconsin. Aid will also be given for the installation of a sim- 
ple system of book-keeping. 

But the N. A. 0. S. service will not end with that preliminary- 
assistance in organization. The community has complied with 
the membership requirements for a year and is therefore en- 
titled to occasional visits by organizers, to inspection of its 
books, and to any aid of a special character that it requests 
when it comes within the province of the N. A. 0. S. Such a 
service in its present form is new in America. "Which brings 
up some of the questions : What is the N. A. 0. S ? Why is it 
giving this service? Who are behind it? What does it sig- 
nify? 



CHARLES W. HOLM AN 479 

How The N. A. 0. S. Was Born 

The N. A. 0. S. was founded in 1915 under the auspices of 
The National Conference on Marketing and Farm Credits. It 
was created as a service agency to give farmers' organizations 
an opportunity to make use of true and tried principles and 
methods of business practice. 

Here is how and why it was born: 

For several years the American people have been much con- 
cerned with the enormous wastage in the marketing of farm 
products. The complete transformation of conditions of pro- 
duction and sale which have done away with the importance 
of the individual farmer and require combination for effective 
sales of farm products, have brought up many complex prob- 
lems and have naturally resulted in numerous failures on the 
part of farmers' organizations. Accordingly, for several 
years, various groups have interested themselves in the devel- 
opment of a constructive business policy for Ai^erican farm- 
ers. In order to find out what should be done, pilgrimages 
were made to various parts of the world. 

Organizations were created for the gathering and tabulating 
of information. Conferences were held for the discussion of 
proposed American policies. During this time sentiment has 
gradually clarified and a large number of those who have 
given thought to this subject are now convinced that there is 
need in America of a citizenship agency controlled by farmers 
and supported by voluntary contributions. This agency, they 
think, should devote its attention to investigating methods of 
doing business, to fighting the farmers' battles before such 
bodies as the Federal Trade Commission, to furnishing of or- 
ganizers to form cooperative societies on approved lines, and 
to assisting these societies from time to time in the transaction 
of their business. 

These leaders point to the methods by which industrial en- 
terprises are formed and kept on an efficiency basis as a reason 
for the creating of such an agency for the farmers. Through- 
out the world may be found efficiency engineers who may be 
called to the service of business enterprises. These engineers 
overhaul a business, find its leaks and make recommendations 
for stopping the waste. They often bring about important 



480 MARKETING AND FARM CREDITS 

changes in policy that reach throughout the entire operation 
of a plant. 

These leaders also have found that in Great Britain and on 
the European continent the efficiency idea has been applied to 
the farming business. But these agencies operate on a broader 
scale than do the efficiency engineers for private business; for 
they have at heart the building of a rural civilization as an 
end, to which better farming business is but a medium. 

At first it was thought that farmers could use the same 
mediums of combination for trade that industrial organizations 
have used. But experience has proved that farmers' organ- 
izations need special laws permitting them to operate and 
should be formed on principles different from the ordinary 
trading bodies. How then to adjust a farmers' organization 
to the requirements of business has become a complex and ex- 
ceedingly difficult problem — one that varies with crops and 
sections. To make this adjustment it was proposed to create 
the National Agricultural Organization Society and the gen- 
eral committee proposed to the delegates who met in 1915 the 
formal inauguration of this society. 

Who Govern The N. A. 0. S. 

The Third National Conference on Marketing and Farm 
Credits unanimously endorsed the recommendation of its gen- 
eral committee and gave authority for the creation of this 
service agency. It authorized the chairman to select a com- 
mittee to undertake the formation of the society and the draft- 
ing of its provisional articles of organization and bylaws. 

Chairman Frank L. McVey of the National Conference on 
Marketing and Farm Credits, president of the University of 
North Dakota, devoted some time to the picking of a commit- 
tee that would undertake the provisional organization of the 
N. A. 0. S. That committee, in addition to himself, consists 
of the following: 

Leonard G. Robinson, former general manager, the Jewish 
Agricultural and Industrial Aid Society, New York City;* 
president, The First Federal Farm Loan Bank, Springfield, 

Massachusetts. 

* Appointed in January, 1917. 



CHARLES W. HOLMAN 481 

Gifford Pineliot, Milford, Pike county, Pa. 
' John Lee Coulter, dean, College of Agriculture, and director, 
Experiment Station, University of W. Virginia, Morganto'wn, 
W. Virginia. 

H. W. Tinkliam, trustee, the Providence Market Gardeners* 
Association, Warren, Rhode Island. 

Charles McCarthy, chief, Wisconsin Legislative Reference 
Library, Madison, Wisconsin. 

Clarence Poe, president, The Progressive Farmer Papers^ 
Raleigh, North Carolina. 

Millard R. Myers, treasurer ; Editor, American Cooperative 
Journal, Chicago, Illinois. 

H. W. Danforth, president, National Council of Farmers* 
Cooperative Associations, Washington, Illinois. 

Clarence Ousley, director of the department of extension 
and home economics, the Agricultural and Mechanical College 
of Texas, College Station, Texas. 

. Harris Weinstock, state market director, San Francisco, Cal- 
ifornia. 

Outlining A Farmers' Campaign 

The committeemen accepted the responsibility and drafted 
the provisional constitution and bylaws modeled after the 
structure of the Irish Agricultural Organization Society which 
embodies the first attempt to do this character of work among 
the English speaking peoples. Under the banner of the I. A. 0. 
S. nearly 110,000 Irish farmers are organized into 1,100 cooper- 
ative societies. The purposes of the N. A. 0. S. as outlined by 
the committee, are: 

(a) To cooperate with central bodies and local 
branches of societies or other associations, for the pro- 
motion of "Better farming, better business, and better 
living. ' ' 

(b) To organize agriculture and other rural indus- 
tries in the United States on cooperative lines. 

(c) To examine into the methods of production and 
distribution of farm products with a view of evolving 



482 MARKETING AND FARM CREDITS 

systems of greater economy and efficiency in handling 
and marketing the same. 

(d) To encourage and promote the cooperative or- 
ganization of farmers and of those engaged in allied 
industries for mutual help in the distribution, storing, 
and marketing of produce. 

(e) To aid in the economical transfer of agricultural 
produce from the producer to consumer. 

(f) To supply instructors and lecturers upon the 
subject of cooperation among farmers, auditing and ac- 
counting experts and legal advice in matters relating 
to organization. 

(g) To issue reports, pamphlets and instructions 
that will help in spreading knowledge of the best 
means of rural betterment and organization, 

(h) To encourage and cooperate with educational 
institutions, federal and state departments, societies, 
educational centers, etc., in all efforts to solve the 
questions of rural life, rural betterment and agricul- 
tural finance and marketing and distribution of pro- 
duce and the special application of the facts and 
methods discovered to the conditions existing among 
the farmers of America and to the solution of the 
problem of increasing cost of living. 

(i) To investigate the land conditions and land ten- 
ure with a view to working out better, more equitable 
and fairer systems of dealing with this problem so 
vital to the social and the economic well-being of the 
country. 

(j) To call from time to time such conferences or 
conventions as will carry out the above mentioned 
objects. 
Since the constitution and bylaws were put forward as a 
working basis it has been subjected to the test and criticism 
•of many people and organizations, and a number of important 
changes will have to be made before it is presented by the com- 
mittee at the first annual meeting. 



CHARLES W. HOLMAN 483 

How The N. A. 0. S. Is Financed 

Among the world citizens keenly interested in the advance- 
ment of agricultural cooperation is Sir Horace Plunkett, 
founder and president of the Irish Agricultural Organization 
Society. About the time of the First National Conference on 
Marketing and Farm Credits, Sir Horace and a group of Amer- 
ican associates met and constituted themselves an informal 
body to promote the organization of agricultural cooperation 
in the United States. 

One of the first of the uses to whicli. the funds of this group 
were applied was in the training of agricultural organizers and 
making it possible for them to study prevailing methods of or- 
ganization in Great Britain and on the European continent. 
When the N. A. 0. S. was launched by the National Conference 
on Marketing and Farm Credits, this group offered its trained 
experts temporarily^ to work under the direction of the N. A. 0. 
S. But the N. A. 0. S. will be financed by fees from different 
organizations which pay service fees or affiliation fees to it. 
It will thus become an entirely democratic self-sustaining body. 

Temporary Home of The N. A. 0. S. 

By means of this financial assistance, the N. A. 0. S. was 
enabled to open temporary general offices in Suite 340, Wash- 
ington Block, Madison, Wisconsin, and to employ a small corps 
of organizers, legal counsel, and a clerical staff. Madison was 
selected as the first home of the N. A. 0. S., largely because of 
its facilities for research afforded by the location of four great 
libraries, and by the presence of a large number of students 
of agricultural economics from all quarters of the globe. These 
students are available for special work and from among them 
a staff of trained experts is being developed. Arrangements 
have been made, however, to transfer the general offices to any 
point in America most convenient whenever the work of the 
society grows to where such transfer would be in the best in- 
terest of the general movement. 

The N. A. 0. S. opened headquarters in Madison in January, 
1916. At that time it offered its services to 14,000 farmers' 
organizations and individuals. It has also conducted an ex- 



484 MARKETING AND FARM CREDITS 

tensive and successful publicity campaign for agricultural 
organization and for the enlightening of the people with re- 
gard to its purposes. It has developed a large correspondence 
Avith individuals and organizations in about 20 states. This 
correspondence has been in the nature of aid to the individuals 
and organizations. Its representatives have traveled extensively 
in the East, the South, Southwest and Northwest, and trips 
are planned through the Central states. 

Decentralization Policy 

The question of distance is the greatest handicap to the 
N. A. 0. S. in the giving of direct service. Accordingly the 
staff has worked out a plan for decentralization of activities. 
This plan looks toward the establishment of division and state 
offices and will include the formation of state committees 
to control activities of resident organizers. Several of these 
will be opened in the near future and arrangements are now 
made to create them as fast as the service is needed and men 
can be secured to do the work in a competent fashion. Ac- 
companying these plans are proposed budgets for expenditures. 
These budgets are based upon field studies of conditions and 
the activities that are most desirable in the initial stages of 
branch and state office work. 

Legal Service and Aids to Legislation 

A glaring defect in the organization of American agriculture 
has been the lack of any recognized and competent agency to 
investigate and devise workable laws governing the formation 
of cooperative societies. The lack of trained legal service 
available for the guidance of farmers ' societies in the drafting 
of their articles of incorporation and their bylaws under the 
terms of the various state cooperative acts, and for the set- 
tling of difficult points arising is most noticeable. 

Yet there are great and pressing problems of national and 
state character Avhich must be solved. Among them are the 
relations of farmers' cooperative societies to the Sherman 
Anti-Trust law, questions that involve discrimination against 
farmers in matters of trade, questions that have to do with 
the power of local associations to inaugurate activities that 
are necessary for their welfare, yet which may be against the 
terms of some form of state corporation law. 



CHAHLES W. HOLM AN ' 485 

To meet this need the National Agricultural Organization 
Society created at the outset a legislative and legal department, 
employing at the head of it two of the most skilled lawyers 
and legislative draftsmen in America. This department is con- 
stantly at work on matter that affects the common welfare. 
Its services are available for the drafting of state and federal 
laws, for the drafting of articles of organization and bylaws 
of any type of cooperative society, and for the fighting of the 
farmers' battles in matters of claims and adjustments which 
might come up from the membership. Already the N. A. 0. S. 
has drafted constitutions and bylaws for a number of co- 
operative organizations and is in touch with leaders in several 
states and will draft for them the cooperative laws adapted 
to the needs of those states. It has looked into the future 
and drafted plans of organization for types of societies not 
yet formed but soon to be formed. 

Surveys and Inquiries 

Prom time to time the N. A. 0. S. is called upon to answer 
questions that relate to the progress of the farming movement. 
Accordingly it is constantly collecting data that may facilitate 
its work, and it conducts surveys in the field. The N. A, 0. S. 
has made preliminary surveys along the following lines : 

(a) The whole milk problems of the Middle Western 
states. It is studying the specific problems at Milwau- 
kee, Chicago, Kalamazoo and Detroit, and expects to 
begin a study of the problems at Cleveland and St. 
Louis. 

(b) Alleged discrimination against farmers in trade 
relations. 

(c) The status of farmers' organizations under the 
Sherman Anti-Trust Act. 

(d) A comprehensive inquiry into the American 
land question, and the distribution of immigrant and 
native population. Constructive programs for land 



486 MARKETING AND FARM CREDITS 

settlement are now in process of preparation. These 
programs include national and state aid macMnery.* 
The N. A. 0. S. reference department has also answered a 
number of inquiries relating to difficult points in cooperation. 

The Training of Employes 

Skilled men, capable of doing agricultural organization work, 
are rare in America. The N. A. 0. S. has therefore begun to 
train young men as organizers. Their work is very different 
from that of the organizer of the old time, as these men must 
not only have a knowledge of agricultural economics but they 
must have special training that fits them to give advice of a 
business character. It is now training four young men for 
organization work and will admit others to the service as its 
facilities enlarge. These young fellows after passing through 
their apprentice work will be assigned to field work as or- 
ganizers, and the more worthy of them may be permitted to 
finish their studies by field observations in foreign lands. 

The N. A. 0. S. has endeavored to and has established co- 
ordinate relations with the United States Department of Agri- 
culture, and with several state departments of agriculture and 
educational institutions. It is also endeavoring to work in 
harmony with existing farmers' organizations. 

Much of its work, however, is in planning for the future and 
the financing of future work. 

How The N. A. 0. S. Can Help Your Community 

When a request comes to the N. A. 0. S. for aid in market- 
ing or purchasing the first thing that is done is to send to that 
community a blank to be filled out. This blank asks important 
fundamental questions and develops information along the fol- 
lowing lines : 

(1) The type of association needed; (2) area to be served; 
(3) the number of farmers expected to join; (4) attitude of 
the farmers toward purchase of shares; (5) characteristic 
crops in territory; (6) railroad facilities; (7) whether any or- 

* Much additional work has been done since this circular was writ- 
ten. 



CHAIRLES W. HOLMAN 487 

ganizations in the territory are engaged in similar activities; 
(8) principal markets; (9) whether the community is shipping 
in carlots or could be brought to ship in carlots; (10) whether 
any cooperative society has been attempted and the history of 
its efforts; (11) prevailing nationalties and w^hether they work 
in harmony; (12) what state and federal aid has been asked^ 
etc. 

These questions are asked in such a way that an average 
person can easily secure enough information to enable the 
N. A. 0. S. staff to arrive at a rough picture of the conditions 
of that community. While waiting for the correspondent to 
fill out this blank whenever possible the N. A. 0. S. makes in- 
quiries concerning the communit}^ and the conditions there. 
It also makes some investigations regarding the person writing 
so as to assure itself that it is not dealing with incompetent 
individuals. If the inquiry comes from a far state the person 
to whom this project is assigned also takes up the question of 
bringing to the aid of that community the recognized organiza- 
tion institutions in the territory, so that if it is impossible for 
the N. A. 0. S. to send a man in person the community Avill 
secure the service of a reliable individual versed in the theory 
and technique of organization. Sometimes the N. A. 0. S. re- 
quests one of these individuals to go immediately to the com- 
munity and make a preliminary survey, and report to the of- 
fice, as a guide in correspondence. 

A FoUow-Up System to Aid Cooperation 

When a community project is deemed worthy of assistance 
and chances appear good for the venture succeeding, the N. A. 
0. S. sends an organizer who goes into the local situation very 
carefully and aids the community in starting on a sane, con- 
servative, business basis. Such an organizer has unexampled 
facilities to assist him in doing his work. Behind him are the 
legal and reference departments and the general office with 
which he is in constant touch. Should the organizer remain 
upon the ground several days, say pending the drafting of a 
constitution and bylaws, the general office carries out his in- 
structions while he is working out local problems. 

After the organization is perfected it is the duty of the or- 
ganizer to aid the community in selecting a competent man- 



488 MARKETING AND FARM CREDITS 

ager, and in some cases to instruct the managers in the details 
of his new business. This may involve assistance in opening up 
a simple system of book-keeping, the formulating of business 
plans, the finding of business correspondents for the handling 
of the new associations, trades, etc. 

The organizer is then expected to keep an eye upon the af- 
fairs of this association and to make visits from time to time 
so as to advise the community where it is making errors. In 
the course of his work, the organizer also encounters problems 
that require the utmost delicacy and tact in handling. Pos- 
sibly at one visit the association may be threatened with a com- 
plete split because of some trivial matter. 

How varied are the demands that come to the Madison office, 
may be seen by a few examples. 

What Was Done for Some Communities 

A Grange in Wisconsin wished to incorporate; articles of 
incorporation were drawn up and sent. Articles of incorpora- 
tion and bylaws have been drafted for a Grange clearing house 
association. 

A cheese producers' federation wished advice as to how to 
distribute dividends. Investigation into the conditions re- 
vealed the fact that the profits of this society were really 
needed as working capital. On advice, the federation placed 
its profits in a reserve fund. 

Bylaws were sent to a creamery company wishing to incor- 
porate; a farmers' trading and supply company in Washing- 
ton state was given assistance in strengthening their organiza- 
tion. 

A joint stock company manufacturing cheese has been aided 
to transform itself into a cooperative company. 

Bylaws have been prepared for a tri-county hky federation 
in Wisconsin. The case of a California poultry association, 
complaining that it had been discriminated against in trading 
matters, has been taken up and will be brought to the attention 
of the Federal Trade Commission. 

Similar cases are being handled as they come up. Criticisms 
of state cooperative laws have been furnished citizens of their 
respective states on request. Improved cooperative laws have 



CHAiRLES W. HOLMAN 489 

been furnished and others are being prepared to be introduced 
in legislatures this fall by citizens interested. Aid has been 
given milk producers in cities of Wisconsin, Michigan, Illinois, 
Pennsylvania and California. A New Mexico community 
wished to start a rural telephone exchange; the N. A. 0. S. 
furnished the articles of incorporation and bylaws with direc- 
tions as to how to proceed. 

The membership fee paid by a local organization is for the 
services described, and at the present time is $5.00 per year, 
which also entitled the society to send a delegate to the annual 
meeting of the N. A. 0. S. This delegate may vote on all mat- 
ters of policy and on the election of the directors and officers 
of the N. A. 0. S. 

Helping The Organized Fanners 

It is not always the unorganized community that is in great- 
est need of expert advice. This has been proven by the ex- 
perience of the N. A. 0. S. in the last few months, when nu- 
merous problems have been presented it by farmers' organi- 
zations already in the field. 

Such problems vary from transformation of joint stock com- 
panies into cooperative corporations to technical questions, as 
to distribution of dividend, building of reserves, and impor- 
tant questions of business policy. Sometimes an organization 
advises that it cannot do business satisfactorily and does not 
know why. It applies to the N. A. 0. S. for aid. Perhaps it is 
unable to secure credit because it is an association in name 
only; it has not incorporated and has no business standing. 
Perhaps it is a joint stock company and the smallest patron 
owns the largest amount of stock, which would immediately 
bring about an internal condition of great grief and anxiety. 
Such organizations have found the efficiency service of the 
N. A. 0. S. to be practical and conservative. Sometimes an 
organization desires information of a general character as, for 
example, an Oklahoma client might wish to know the condi- 
tions surrounding the marketing of hay in Chicago, or the San 
Francisco milk producers might wish to know the conditions 
and the producers' methods of organization in the large cen- 
ters of the Middle West and East. Such service the N. A. 0. S. 



490 MARKETING AND FARM CREDITS 

furnishes witli a promptitude commeusurate with the difficul- 
ties of gathering the data. 

One of the most needed services that such organizations can 
get is the audit service maintained by the N. A. 0. S. It has 
been truly said that the annual audit of a business organiza- 
tion is parallel to a physician's examination of the human 
body. When the auditor is through with you he knows what 
is the matter with you and his report is the basis for the cor- 
rection of business ailments. 

Improving Quality and Increasing Sales 

Where the N. A. 0. S. deals with a cooperative marketing 
association it endeavors to put into the rules provision whereby 
the association will guarantee the quality of its produce, and 
improve this quality, develop its own brand and utilize ap- 
proved methods of building its trade. The N. A. 0. S. believes 
that the time is not far distant when trade-marked advertised 
farm products will be one of the large factors in the advertis- 
ing field. It is accordingly studying this problem and coun- 
seling with its clients. 

Why Join The N. A. 0. S.? 

With hundreds of large organizations in the field, many of 
whom claim for their end the organization of the farmers, the 
question arises, why should a community apply for N. A. 0. S. 
aid and why should farmers' organizations avail themselves. 
of its service ? 

The answer lies in the following reasons : 

(1) The N. A. 0. S. is a service agency. 

(2) The organizations subscribing for the service 
have control over the policy. 

(3) It does not attempt to control the policy of any 
local or group organizations subscribing for this serv- 
ice. It only offers the benefit of its experience which 
is optional with the organization as to adoption. 

(4) The organizations created by it are uniform in 
character where district conditions are similar. 

(5) It is the only institution today in America that 



CHARLES W. HOLMAN 49-I 

fulfills the demand of the farmers as voiced by Mr. C. 
B. Kegley, master of the Washington State Grange, 
who in his 1910 address said: 

"The one great need of the farmer is a national 
headquarters with bureaus of information, research, 
etc. Every organization, other than our farm organ- 
izations, that I know of maintains just such a national 
headquarters in charge of trained experts with an am- 
ple staff of assistants to maintain it in a high state of 
effectiveness. Any member of the National Manufac- 
turers' Association, for example, if need arises, can 
wire, or mail the information required. There is not a 
business association of any importance that I know of 
that is not organized in the same way. We need such 
a national headquarters, and must have it if we 
farmers are to be as effective as we ought to be." 

How to Secure N. A. 0. S. Service 

Varied demands and unequal distances make it impossible 
to establish a rule to govern every application for aid but if 
your community thinks the N. A- 0. S. might be of service to 
it, write to the Madison, Wisconsin, office and state your case 
as frankly as you can. Prompt attention may be expected for 
all communications and a few exchanges of letters will enable 
your community to find out what may be necessary for it to 
do and to what extent you maj" expect the N. A. 0. S. to help 
you. 



492 MARKETING AND FARM CREDITS 



ANNOUNCEMENT OF THE NATIONAL AGRICUL- 
TURAL ORGANIZATION SOCIETY 

TO THE FARMERS OF AMERICA: 

At the 1915 meeting of the National Conference on Market- 
ing- and Farm Credits this committee, whose names are under- 
signed, was authorized to undertake the formation of a Na- 
tional Agricultural Organization Society. The first step has 
been taken by this committee in the drafting of a provisional 
constitution and bylaws, which are no^v offered for your con- 
sideration with a view to affiliation. 

The big reason for the formation of a National Agricultural 
Organization Society is that agriculture alone of all the great 
industries remains unorganized. 

Constant and effective agitation by the Grange, the Farmers' 
Union, the Society of Equity, the Gleaners, and other societies 
created to promote agriculture, has implanted the cooperative 
principles and cooperative spirit in America. In response, 
thousands of local cooperative associations of farmers have 
sprung up, and the number is constantly increasing. 

As a further and direct result of the educational propaganda 
so effectively carried on by these societies, laws providing for 
the organization of cooperative associations have been enacted 
in a number of states; state market bureaus have been estab- 
lished; pure seed, pure food, and other equally necessary laws 
have been passed. All that means advancement. That ad- 
vancement is shown by the fact that the yearly business done 
l)y cooperative agricultural organizations in the United States 
is $1,400,000,000, according to an estimate of the U. S. Depart- 
ment of Agriculture. 

Still agriculture is the one great industry that has not been 
organized on a broad and effective scale. 

It may seem strange that the procedure and the work of the 
units that constitute business of such tremendous proportions 
should not be coordinated 'and that a central society or a fed- 



This annoimcement was made February 28, 1916. 



ANNOUNCEMENT OF N. A. O. S. 49a 

eration has not been established for this purpose. But such 
is the ease and each society does its work independently 
whether it be a berry-growers' association, a creamery, or a 
great organization for the propaganda of educational work. 
In this way a great potential strength lies dormant and unutil- 
ized. Yet cooperative effort is essential in agriculture as in 
other businesses. 

O'ther matters and other questions of big import to agricul- 
ture make it at once apparent that the United Utates must 
have a federation such as exists in Germany, Ireland, and other 
countries. Among these questions are transportation, import 
and export issues, cold storage facilities of the country, the 
attitude of the national and other chambers of commerce, the 
further establishment of cooperative laws, the creation and 
maintenance of uniform packs and grades, the inauguration 
and maintenance of state market commissions, the insistence 
upon education in harmony with the business of agriculture, 
the creation of credit facilities for land purchase and for 
financing of farm business, the necessitA^ of a just interpreta- 
tion of the Sherman Anti-Trust Act, representation in eases 
before the Federal Trade Commission that involve unfair dis- 
crimination, legal help in the organization of cooperative as- 
sociations, a provision for the maintenance of expert auditors 
of farmers' associations, and the securing of full information 
relative to the experience of farmers' organizations in other 
countries. 

Federation will create a common bond, and educate to com- 
mon action. An organization for the dissemination of knowl- 
edge on the subject of market and farm products for coopera- 
tive credit, and for the promoting of coordinate and forceful 
action in all such matters, is a great need, and this committee 
offers the National Agricultural Organization Society as a 
means of working to that end. The committee hopes that 
through the N. A. 0. S., a permanent federation may be ef- 
fected. 

Such a federation will not displace or injure any existing 
agricultural organization or federation however country-wide 
it may be. Indeed the very purpose of the N. A. 0. S. is to 
strengthen everv one of those now in the field. 



494 MARKETING AND FARM CREDITS 

Our efforts, therefore, are especially timely, and should re- 
ceive the sauctiou of every governmental department and in- 
stitution and of every person who desires to see this Nation 
strong and in condition either for war or for peace. The organ- 
ization of agriculture is a prerequisite for either. 

The committee, therefore, requests you to affiliate yourself 
and your organization with the National Agricultural Organ- 
ization Society. 

The committee has unanimously adopted a resolution that 
-all individual members who have paid $2 to the National Con- 
ference on Marketing and Farm Credits in the year 1915 should 
be considered as affiliated with, the National Agricultural Or- 
ganization Society for the year 1916, and that all local organ- 
izations that had paid $5 or more for the same period and 
group organizations of locals that had paid $25 or more up to 
December 1, 1915, should be affiliated for the same period. 

The acceptance of this affiliation by individuals and organ- 
izations constitutes the first organization of the National Agri- 
cutural Organization Society which is now in existence, and a 
vigorous campaign will be concluded to secure more funds. 
The Society is already in condition to give legal and expert 
help to organizations upon problems confronting them. It has 
a reference bureau for questions, and in the service of the 
Society are experts in cooperative law, organization prol3lems, 
sales problems, and purchase problems. 

The committee passed a special resolution covering the ad- 
mission of farmers' organizations until the time of the first 
annual meeting in the fall of 1916. That resolution provides 
for a flat charge of $5 for each local association and $20 for a 
group of affiliated associations. 

If you are affiliated with the Society, you will be entitled to 
this service at once. 

Please read the constitution and by-laws, and let us know 
what you think of this temporary agreement. 

It has been determined that one day of the next meeting of 
the National Conference on Marketing and Farm Credits will 
"be set aside as the first general meeting of the National Agri- 
cultural Organization Society. At that time the general com- 
mittee will turn over responsibility of managing the N. A. 0. S. 



BYLAWS OF N. A. O. S. 495 

to the committee elected by the delegates who compose the 
permanent organization. 

GENERAL COMMITTEE 

Fra?;k L. MgVey, chairman; president, University of North 
Dakota, Grand Forks, North Dakota. 

GiFFOKD PiNCHOT, president. National Conservation Asso- 
ciation, Milford, Pike County, Pa. 

JohjN' Lee Coulter, dean. College of Agriculture, and di- 
rector, Experiment Station, University of W. Virginia, 
Morgantown, W. Virginia. 

H. W. TiNKHAM, farmer, Warren, Rhode Island. 

Charles McCarthy, chief, Wisconsin Legislative Reference 
Library, Madison, Wisconsin. 

Clarence Poe, president, the Progressive Farmer Papers, 
Raleigh, North Carolina. 

MiLLVRD R. Myers, treasurer; farmer, editor, American 
Cooperative Journal, Chicago, Illinois. 

Leonard G. Robinson, former general manager, The Jew- 
ish Agricultural and Industrial Aid Society, New York 
City; president, First District Federal Land Bank, 
Springfield, Mass.* 

H. W. Danforth, farmer; president. National Council of 
Farmers Cooperative Associations, Washington, Illi- 
nois; president, The Federal Land Bank, St. Louis, Mo. 

Clarence Oitsley, farmer, director of the Department of 
Extension and Home Economics, the Agricultural and 
Mechanical College of Texas, College Station, Texas. 
The work of the Society is administrated by a Cooperative commit- 
tee, consisting of Miles C. Riley, counsel; Charles A. Lyman, general 
organizer; Charles W. Holman, secretary. The temporary general of- 
fices of the Society are 340 Washington Building, Madison, Wisconsin. 

(PROVISIONAL) 

CONSTITUTION AND BYLAWS OF THE NATIONAL 

AGRICULTURAL ORGANIZATION SOCIETY 

ARTICLE I 

Name and Place of Business 

Section 1. This society shall be called the "National Agricultural 

organization Society," and shall be hereinafter referred to as the "N. 

A. O. S." 

Section 2. The general office of headquarters of the N .A. 0. S. shall 
be at such place as the committee may select, where all the books, ac- 
counts, securities, and documents of the N. A. O. S. shall be kept. 
Offices or districts found necessary for the efficient carrying out of the 
purposes of the society may be established by the committee subject 
to change at the regular annual meeting. 

* Elected to membership on the committee in 1916. 



496 MARKETING AND FARM CREDITS 

ARTICLE II 
Objects and Poweks 
Section 1. The objects of the N. A. 0. S. shall be: 

(a) To cooperate with central bodies and local branches of societies 
or other associations, for the promotion of "Better farming, better 
business, and better living." 

(b) To organize agriculture and other rural industries in the United 
States on cooperative lines. 

(c) To examine into the methods of production and distribution of 
farm products with a view of evolving a system of greater economy 
and efficiency in handling and marketing the same. 

(d) To encourage and promote the cooperative organization of farm- 
ers and of those engaged in allied industries for mutual help in the 
distribution, storing, and marketing of produce. 

(e) To aid in the economical transfer of agricultural produce from 
the producer to consumer. 

(f) To supply instructors and lecturers upon the subject of coopera- 
tion among farmers, auditing and accounting experts and legal advice 
in matters relating to organization. 

(g) To issue reports, pamphlets and instructions that will help in 
spreading knowledge of the best means of rural betterment and organ- 
ization. 

(h) To encourage and cooperate with educational institutions, fed- 
eral and state departments, societies, educational centers, etc., in all 
efforts to solve the questions of rural life, rural betterment and agri- 
cultural finance and marketing and distribution of produce and the spe- 
cial application of the facts and methods discovered to the conditions 
existing among the farmers of America and to the solution of the 
problem of increasing cost of living. 

(i) To investigate the land conditions and land tenure with a view 
to Avorking out better, more equitable and fairer systems of dealing 
with this problem so vital to the social and the economic well-being of 
the country. 

(j) To call from time to time such conferences or conventions as 
will carry out the above mentioned objects. 

Section 2. The N. A. 0. S. shall have full powers to do the things 
necessary or expedient for the accomplishment of all the objects speci- 
fied in its bylaws. 

ARTICLE III 
Membership and Basis of Suppoet 
Oonstitution of Membership. 

Section 1. The members of the N. A. 0. S. shall consist of: 

(a) The president, vice-president and members of the committee for 
the time being. 

(b) Agricultural societies and associations formed under the coopera- 



BYLAW'S OF N. A. 0. S. 497 

tivG'laws of the respective states, or other corporate bodies whose con- 
stitution is in accordance with the principles of the N. A. O. S., that 
are admitted to membership by the committee, and pay to it affiliation 
fees or other contributions in accordance with the scale laid down from 
time to time by the committee or by the regular annual meetings. 
Such organizations shall hold one membership certificate in the N. A. 
0. S. 

(c) Individuals, styled "subscribing members," who shall subscribe 
$5 and upwards annually to the funds of the N. A. 0. S., and who shall 
hold one membership certificate in the N. A. O. S. 

(d) Individuals, styled "life members," who have in the past con- 
tributed sums of $100 or upwards to the funds of the N. A. 0. S., or 
who may in the future do so, and who shall hold one certificate in the 
N. A. O.. S. 

Mode of Admission. 

Section 2. Applications for admission to membership shall be made 
in the form prescribed by the constitution and bylaws of the N. A. 
O. S., and shall be laid before the next meeting of the committee for 
the time being. 

The committee shall have the right of deciding as to the admission 
or rejection of any applicant, subject to an appeal to any special or 
annual meeting. 

The secretary shall, within one week after the date of the meeting at 
which applications are considered, post to the applicant a notification 
of his admission or rejection, as the case may be. 

HoAV Members May be Admitted 

Section 3. Societies and individuals applying for admission shall 
comply with the following conditions: 

(a) All agricultural societies formed under the cooperative laws of 
the respective states and other corporate or non-incorporated bodies 
whose constitutions are in accordance with the principles of the N. A. 
O. S. shall apply and make payment in full for one $5 membership cer- 
tificate in the N. A. O. S., and shall further pay annually on or before 
December 1st, an afiiliation fee or other contribution in accordance 
with the scale laid down from time to time by the committee or by the 
regular annual meetings. 

(b) Societies and individuals who have previous to the annual meet- 
ing of 1916 affiliated with the N. A. 0. S., and all that have paid in 1915 
$2 or more to the Third National Conference on Marketing and Farm 
Credits shall be considered to have complied with that condition which 
requires them to take one fully paid membership certificate in the 
N. A. 0. S. 

(c) Every member of the N. A. 0. S., whether a society or an indi- 
vidual, shall hold one membership cei-tificate, and not more than one, 
which in the case of an individual may be paid out of his first annual 
subscription. 



498 MARKETING AND FARM CREDITS 

(d) The membership certificates shall not be transferable, and shall 
be of the nominal value of $5. They shall be registered in the names 
of their respective holders, and shall bear no interest. The holding of 
a membership certificate in the N. A. 0. S. shall confer no right upon 
any member whose annual subscription is in arrear. 

(e) All moneys due by members, whether on account of certificate 
or contributions, shall be recoverable as a debt due to the N. A. 0. S. 
A list of all such arrears shall be submitted to each committee meet- 
ing which may either direct the institution of proceedings for their 
recovery or cancel the membership of the defaulter. 

Cessation of 3Ienibership. 

Section 4. Membership shall cease in the N. A. 0. S.: 

(a) By withdrawal on written notice of the N. A. O. S. on or before 
the first day of January in any year; which notice, in the case of a cor- 
porate body, shall be authenticated by the signatures of its chairman 
and secretary. Upon such withdrawal all sums paid by the member 
whether as subscriptions, or as donations, shall be forfeited. 

(b) By failure to pay the annual subscription by December 1st in 
any year, unless the default is explained to the satisfaction of the 
committee. 

(c) By expulsion in the manner following: If any member of the 
N. A. 0. S., after being warned in writing by the committee to desist 
from any conduct specified in such warning which the committee con- 
sider to be injurious to the N. A. O. S., or to the movement generally, 
persists in such conduct, the committee (1) may bring the conduct 
complained of by a charge in writing, where the same is specially 
stated, and of which the offender shall have 14 days' notice, be- 
fore a meeting of the N. A. 0. S., which may expel the member com- 
plained of, or otherwise deal with the case as it t^iinks fit; (2) may, 
until such meeting can be held, suspend the offender from exercising 
under the by-laws of the N. A. 0. S. any right not connected with any 
defense to the charge made. No member so expelled shall again be 
readmitted except by the votes of two-thirds of the members and dele- 
gates present at a regular annual meeting; nor unless notice has been 
given thirty days prior to such annual meeting of the intention to pro- 
pose his readmission. 

Xiability. 

Section 5. The liability of the member shall be limited to the 
amounts of their subscriptions for the current year. 
Rights and Powers of Members. 

Section 6. All members have the right to speak at the regular and 
special meetings and to send in proposals to be placed on the order 
of business for discussion, but the right to vote on ordinary business 
shall be exercised only by delegates from societies and members of the 
committee. 

A cooperative society has a right to the assistance of the N. A. 0. S. 



BYLAiWiS OF N. A. 0. S. 499 

in protecting its interests and to the benefit of all arrangements made 
by the N. A. 0. S. for the joint benefit of affiliated societies; to receive 
advice from the officers and committee of the N. A. 0. S. regarding all 
questions of business and administration; to inspection of its books 
and affairs generally by officers of the N. A. 0. S. 

Duties of Members. 

Section 7. It is the duty of members: 

(a) To observe the by-laws of the N. A. 0. S. and the decisions of all 
the meetings. 

(b) Not to act contrary to the interests of the N. A. O. S. or the 
movement generally. 

(c) To pay affiliation fees in accordance with the scale fixed by the 
regular annual meeting. 

(d) To assist the committee in gathering statistics, and business re- 
ports relating to agricultural organization. 

ARTICLE IV 

Constitution and Procedure of the Annual and Special Meetings 
Constitution. 

Section 1. The regular annual meeting shall consist of delegates 
from affiliated societies and the members of the committee. 

Appointment of Delegates. 

Section 2. Delegates from affiliated societies shall be appointed an- 
nually in the form prescribed by Appendix B at an annual meeting 
of the affiliated society, and each such society may appoint one dele- 
gate who shall have one vote only; he shall be a member of the society 
he represents, and no delegate may represent more than one society. 

Substitutes for .Ibsent Delegates. 

Section 3. Voting by proxy at any meetings of the N. A. O. S. shall 
not be permitted, provided that in the event of any delegate being un- 
able to attend, the committee of his society may appoint a substitute, 
who shall be a member of the same society, who may attend and vote 
at such meeting if a notice of such appointment signed by the chair- 
man and secretary of his society be sent to the secretary of the N. A. 
O. S. not less than 48 hours before said regular annual meeting. 

Quorum. 

Section 4. The quorum for an annual meeting shall be one-third of 
all voting delegates. 

No regular annual or special meetings of the membership shall pro- 
ceed to business unless a quorum be present within half an hour of the 
time of meeting; otherwise, if the meeting be a regular annual meet- 
ing or a special meeting convened by the committee it shall stand ad- 
journed for fourteen days, to the same hour and place, of which ad- 
journment notice shall be sent to the address of each member entitled 
to vote thereat; and the adjourned meeting shall be competent to pro- 



500 MARKETING AND FARM CREDITS 

ceecl to business at the end of half an hour from the time of holding 
the meeting, whatever the number of members or delegates present 
may be. But, if the meeting is convened by a notice from the mem- 
bers and the want of a quorum has arisen, it shall be absolutely dis- 
solved. 

Notices of Meetings. 

Section 5. There shall be sent to every member and delegate, one 
month before each regular annual meeting a notification of the time 
and place of the meeting and a statement of the business before the 
meeting. 

Proposals by Members. 

Section 6. Proposals received by the secretary not less than two 
weeks before the issue of the notice of meeting shall, subject to the 
ruling of the committee as to their being germane to the business of 
the Society, be inserted in the order of business. 

Who May Vote. 

Section 7. Members and representatives of an affiliated society may 
attend the annual meeting and speak in debate, but shall have no vote 
unless they are either delegates or members of the committee. 

Admission to Meetings. 

Section 8. Members and delegates shall be admitted to the annual 
meetings only by cards of admission, in such form as the committee 
from time to time directs. 
Place and Time of Annual Meetings. 

Section 9. One regular annual meeting, hereinafter called the an- 
nual meeting, shall be held in each year. The regular annual meet- 
ing shall be held at such places in the United States and at such dates 
as the committee may decide. 

PoAvers and Duties of Annual Meetings. 

Section 10. The annual meeting shall have the following powers 
and duties: 

(a) To define or alter the policy of the society. 

(b) To determine the scale of affiliation fees. 

(c) To consider and, if approved, adopt the Annual Report and Ac- 
counts presented by the committee. 

(d) To expel members. 

(e) To consider and decide upon complaints against the committee 
or officials. 

(f) To alter or amend by-laws. 

(g) To dissolve the society. 

(h) To transact other business incidental to the meeting. 

Special Meetings. 

Section 11. Special meetings shall be held whenever the committee 
may deem it necessary, or on requisition, with cause shown, from not 
less than one-third of the affiliated societies. 



BYLAWS OF N. A. O. S. 501 

Notice of Special Meeting. 

Section 12. Notices for special meetings shall be mailed to the ad- 
dress of each member and delegate, at least 14 days before the holding 
of such meeting. These notices shall specify tlie time, place, and ob- 
ject of the meeting, and shall bear the name of the secretary. No 
business other than that specified in the notice convening the meeting 
shall be transacted at such meeting. 

Majority of Votes to Decide. 

Section 13. All questions, other than elections, shall be decided by 
a majority of votes ascertained by a show of delegates' tickets or cer- 
tificates. 

Minutes. 

Section 14. The minutes of the meetings shall be kept in the man- 
ner prescribed by the committee, and shall be submitted to the com- 
mittee at its next meeting after each special or annual meeting. 

ARTICLE V. 
ConstitutiojN' and Procedure of the Committees. 
Constitution. 

Section 1. The committee shall consist of the following members 
(exclusive of the president and vice-president, who shall be ex-officio 
members, who retire annually, and who are elected by the affiliated so- 
cieties), viz.: 

(a) Bight members. At the first election of the committee two shall 
be elected for one year, two for two years, two for three years, and two 
for four years. As the terms of the members so elected expire their 
respective successors shall be elected for a term of four years. 

(b) Four members elected by the subscribing members, of whom one 
shall retire annually by rotation, except at the first election when one 
shall be elected for one year, one for two years, one for three years, 
and one for four years. 

Mode of Election 

Section 2. At the first annual meeting the voting delegates shall 
elect the committee as a whole, and the committee at its first meeting, 
thereafter, shall cast lots to determine the period of each member's 
tenure of office. At this and succeeding annual meetings, the election 
of officers and members of the committee shall take place at the annual 
meeting and shall proceed by ballot on printed forms provided for that 
purpose by the secretary. Such ballots shall be checked against the 
credentials of the delegates. 

Eligibility for Re-Election. 

Section 3. All retiring members are eligible for re-election and shall 
hold office until their successors are elected. 



502 MARKETING AND FARM CREDITS 

Quorum of Committee. 

Section 4. Five members of the committee shall form a quorum. 

Chairman of Committee. 

Section 5. The president, and in his absence the vice-president, shall 
take the chair at all meetings of the committee; if both be absent, the 
committee shall designate one of their number as chairman. 

Removal of Committeeman from Office. 

Section 6. Any committeeman may be removed from office at any 
regular or special meeting by two-thirds of the members present and 
voting, and such meeting may thereupon proceed to fill his place by a 
vote of the majority of the members voting. 
Powers and Duties of the Committee. 

Section 7. The committee shall have control of all business carried 
on by or on account of the N. A. O. S., subject to the provisions herein 
contained. It shall arrange the hours and place of meeting, and shall 
meet as often as is found necessary for the transaction of the business 
of the N. A. O. S. 

The committee shall present an annual report to the annual meeting. 

The committee shall supervise the accounts and payments of the N. 
A. O. S. which shall be entered in the books thereof as they from time 
to time direct. 

Committeeman to be Deemed Members. 

Section 8. EVery person elected to the committee shall be deemed 
for all purposes connected with the management of the N. A. 0. S., to 
be a member thereof, and shall have one vote at the meeting of the 
N. A. O. S. during his term of office. 

Disqualification of Committeemen. 

Section 9. Any member of the committee shall vacate his office if he 
holds any other office or place of profit under the N. A. O. S., or if he 
or any society he represents as a delegate becomes bankrupt, insolvent, 
or goes into liquidation; if he is concerned in, or participates in, the 
profit of any contract with the N. A. 0. S., provided, however, that no 
committeeman shall vacate his office by reason of his being a member 
of any society which has entered into contract with, or done any work 
for, the N. A. O. S., but he shall not vote in respect of such contract 
or work. 

Special Meetings 

Section 10. Special meetings of the committee shall be summoned 
hy sending a notice to each member at least seven days before the date 
of such meeting. The notice shall state the nature of the business to 
be transacted thereat. 

A special meeting may be called by a notice in writing, given to the 
secretaiy, by two members not less than ten days before the time pro- 
posed for such meeting, and no other business shall be transacted at 
the meeting than the business named therein. The secretary shall 



BYLAWS OF N. A. O. S. 503 

forthwith issue notices to the members of the committee accordingly. 
Sub-Conimittees. 

Section 11. The committee may appoint subcommittees of its owu 
members, wlio shall, in the functions entrusted to them, conform in all 
respects to the instructions given them by the committee. 

ARTICLE VI. 
Powers and Duties of Officees axd Auditors. 
Chairman. 

Section 1. At all meetings, the president of the Society shall pre- 
side; in his absence, the vice-president; in his absence, any member of 
the committee whom the meeting may choose. 

The chairman shall not vote unless the votes be equal. 

The Secretary and Treasurer. 

Section 2. The committee shall appoint a secretaiy to the N. A. 0. 
S., and a treasurer also, who shall have such functions and remunera- 
tion as the committee from time to time assigns to them, but neither 
shall have a vote. They shall in all respects act under the control and 
direction of the committee, and a satisfactory bond shall be required 
of the treasurer. The secretary, subject to the approval of the com- 
mittee, shall appoint all employes of the N. A. O. S., and shall fix their 
duties, salaries and allowances. The secretary, or any employe, may 
be removed by the committee. But the treasurer and secretary may be 
the same person if the committee see fit. The secretary and treasurer 
shall be subject to the limitations herein mentioned, and shall attend 
the meetings of the committee. 

The Auditors. 

Section 3. There shall be two auditors of the N. A. 0. S., one of 
whom shall be a certified public accountant. Both auditors shall be 
elected by the members at the annual meeting of the N. A. 0. S., and 
shall retire annually, but shall be eligible for re-election. 

They shall audit the accounts of the N. A. 0. S., and see that they 
are correct, duly vouched and in accordance with law. They shall ex- 
amine all securities, and shall have power to call for and examine all 
papers and documents belonging to the N. A. O. S., and every balance 
sheet signed by them, and approved by any annual meeting, shall be 
printed and made public for the use of the members of the N. A. 0. S. 

No employe of the N. A. 0. S. shall be an auditor of its accounts. • 

Security from Officers and Employes. 

Section 4. Elvery person appointed to any ofiice touching the receipt, 
management, or expenditure of money for the purposes of the N. A. O. 
S., shall, before entering upon the duties of his office, give such secur- 
ity as is thought sufficient by the committee for the time being. 



504 MARKETING AND FARM CREDITS 

ARTICLE VII 

Miscellaneous. 
Funds. 

Section 1. The funds of the N. A. 0. S. shall be applied to further- 
ing its objects and to no other purpose. 
The Seal of the Society. 

Section 2. The N. A. O. S. shall have its name engraved in legible 
characters on a seal, and shall have its name mentioned in legible char- 
acters in all notices, advertisements, and other official publications, 
promissory notes, endorsements, checks and orders for money or goods 
purporting to be signed by or on behalf of the N. A. O. S. and in all 
invoices, receipts and letters of credit of the N. A. O. S. The seal shall 
be in such custody as the committee direct, and shall be used only 
when directed by a resolution of the committee, a minute of which 
resolution shall be duly recorded by the secretary. 

Disputes. 

Section 3. In case any dispute arises between the N. A. O. S. and 
any of its members, or of members or persons claiming on account of a 
member, or under the bylaws, or of any complaint against any member, 
application may be made to the committee for redress and, should they 
not bring the parties to agreement, appeal may be made to a meeting 
of the members of the N. A. 0'. S., whose decision shall be final. 

Complaints. 

Section 4. If any member has any complaint to make respecting the 
conduct of any of the employes of the N. A. 0. S., such complaint shall 
be sent in writing, signed as the committee directs, to the committee of 
the N. A. O. S., and shall be investigated and decided by the commit- 
tee, who shall record their decision on their minutes, subject, never- 
theless, to appeal to a meeting, whose decision shall be final. Every 
complaint brought under this section before any committee or meeting, 
shall be stated on the order of business of the meeting. 

Sugestions. 

Section 5. Any member may send to the committee in writing, any 
suggestions for carrying into better effect the objects of the N. A. 0. S., 
which shall be considered by the committee. 

Religion and Politics. 

Section 6. No religious or political question shall be introduced at 
any meeting of the N. A. O. S., and no action of the N. A. O. S. shall be 
directed towards the propagation of any political or religious doc- 
trines, or the advancement of the interests of any political party or re- 
ligious body. 

Alteration of Bylaws. 

Section 7. No new bylaw shall be made, nor any of the bylaws re- 
pealed or altered except by the vote of a two-thirds majority of the 
members present, and voting thereon at a special or annual meeting of 
the N. A. O. S. 



BUSINESS PROCEEDINGS. 



CONFERENCE RESOLUTIONS 507 



REPORT OF THE COMMITTEE ON RESOLUTIONS 

In the preparation of resolutions, the committee has in mind 
the purposes of the call for the Conference. The many opin- 
ions held of problems pressing for solution have made it im- 
possible to include the content of all resolutions offered to the 
committee. This Conference, however, consisting of represen- 
tatives from 48 states, the District of Columbia, and from Can- 
adian provinces, presents its views for public consideration un- 
der the following heads : 

(1) Farm Finance and Congratulations. 

(2) Land Settlement. 

(3) Marketing. 

(4) Conservation and Rural Development. 

(5) National Agricultural Organization Society. 

RESOLUTIONS ON FARM FINANCE 

In response to popular demand for the better financing- of 
the farmers of the United States, a law has been enacted known 
as the ''Federal Farm Loan Act," and to put in operation the' 
system created by said act a Federal Farm Loan Board has been 
organized under said law. 

The said Federal Farm Loan Act offers the first and only ef- 
fective system for the proper financing of the farmers of the- 
country on long time mortgage loans at low rates of interest 
and easy payments. 

AVe believe the bonds to be issued by the federal land banks 
created by this act will be of the highest class of investment 
securities. They are supervised by the government, secured 
by first mortgages on cultivated lands appraised at not more 
than 50 per cent of the value of such farms, and are further 
guaranteed by the 12 federal land banks with a combined 
capital of $9,000,000, and are exempt from all kinds of taxa- 
tion. 



508 MARKETING AND FARM CREDITS 



Recommend Farm Loan Act 

We heartily recommend to the farmers of the United States 
the Federal Farm Loan Act and urge upon them that they 
make the fullest possible use of the same. And we especially 
•endorse the national farm loan associations as providing the 
best means of which farmers can avail themselves of the bene- 
fits of this law. 

A doubt exists as to whether loans under the Federal Farm 
Loan Act can be legally made on lands which form a part of 
irrigation, drainage or reclamation districts on account of the 
lien against these lands for the bonds that are outstanding. If 
necessary, we recommend that an amendment be made to the 
present law to clear these lands of any such obstacle and render 
them eligible for loans without question. 

Ask Short Time Credit Law 

There is urgent need of a system of short time credits for the 
farmers of the United States, and the Fourth National Confer- 
ence on Marketing and Farm Credits urges upon Congress the 
enactment of a law which will supply that need. 

We also recommend that Congress sliall create some author- 
ized power to certify notes — properly and adequately secured 
"by livestock, cotton, grain and other farm commodities — to the 
end that said notes shall find a wide and ready market at rea- 
sonable rates of interest. This would' aid in putting the farm- 
ing industry on an equal credit footing with other lines of 
husiness throughout the country. It would eliminate excessive 
rates of interest now charged for short time accommodations 
Ijy local money lenders. 

RESOLUTIONS ON LAND SETTLEMENT AND RURAL 
DEVELOPMENT 

At its 1915 meeting this Conference called attention to the 
need for dealing with land settlement as an important economic 
and social question, and for action by the Nation and several 
states that would broaden the opportunity for those who wish 



CONFERENCE RESOLUTIONS 509^ 

to live in the country bnt who much depend mainly on frugality 
and industry in the purchase and improvement of farms. 

The introduction of the Grosser Bill in Congress shows that 
the need for such action is being recognized and we endorse 
the general purpose of this measure. But we are opposed to 
any system of perpetual bureaucratic control of government 
promotion which would establish a dependent peasantry. 

It is becoming increasingly manifest that the settlement of 
privately owned lands cannot be left wholly to unregulated- 
private enterprise. In too many instances this plan has been- 
inefficient and marked by unnecessary hardship and loss to 
settlers, resulting in unwarranted inflation of land prices. 

All sections and classes are interested in the introduction of 
better methods of land settlement to overcome the growing 
menace of farm tenantry, to maintain the balance between city 
and country life and, by increasing production, to lessen the 
cost of living. 

Recommends Wyoming Plan 

If we are to have a scientific land settlement policy it should 
include the following features: 

1. Detailed soil and economic surveys of unsettled 
lands to determine the character of the soil, the need ' 
for drainage and irrigation and the kind of agriculture 
or horticulture best suited to the locality. The results 

. of such surveys should be published as a guide to pub- 
lic and private enterprise in the preparation of plans 
for colonization and the disposal of land to settlers. 

2. The adoption of a policy under which the federal 
or state government or the two cooperating, will pro- 
vide ' ' ready-made farms ' ' that will be habitable and 
can be made immediately productive. "We endorse 
plans similar to those formulated under the report on 
land settlement in "Wyoming, which provides for co- 
operation between the federal and state authorities 
for the creation of settlements in which community as 
well as individual needs are cared for. This policy in- 
cludes provision for towns, schools, roads and the de- 



510 MARKETING AND FARM CREDITS 

termination of the size of farms needed to furnish em- 
ployment and give a living income to the settler. The 
Wyoming plan also provides homes for farm laborers 
which will give them economic independence through 
the ownership of suiTicient land to enable the laborer's 
family to grow its own fruits and vegetables and keep 
a cow, pigs, and poultry. The object of this is to en- 
able settlers to earn a living income from the soil in 
less time and with smaller expenditure of money than 
is possible where each one works unaided and alone. 
Such expenditures, or loans, should be repaid by the 
settler with interest, under such conditions and in such 
time as will permit the money to be earned out of the 
soil. 

3, Such supervision of private colonization and of 
the private sale of lands as shall prevent misrepresen- 
tation and fraud and aid the settler in selecting lands 
suited to his needs. 

4. The creation of institutions and the employment 
of competent farm advisers for beginners as will pre- 
vent costly mistakes and promote the spirit of agricul- 
tural cooperation, and of community rather than in- 
dividual action. 

Federal Commission to Study Land Question 

This Conference again urges its recommendation of 1915 for 
the appointment of a federal commission having authority to 
employ a body of expert assistants to carry on inquiry in all 
parts of the country, which will show: 

(1) Methods and results of unregulated private set- 
tlement ; 

(2) The need for more favorable financial terms of 
purchase by tenants and would-be farmers of small 
capital; and 

(3) The feasibility and value of adopting in this 
country- some of the policies of other countries which 
have done so much to improve agricultural and social 
conditions in these countries. 



CONFERENCE RESOLUTIONS 511 



National Information Agency- 
There is an evident need for the establishment of comprehen- 
sive, reliable and disinterested national agencies that will fur- 
nish: 

(1) Information to would-be farmers, Avhether Amer- 
ican born or immigrants from other countries; 

(2) The opportunities for settlement in different 
■sections of the country; and 

(3) Assistance in securing homes and becoming es- 
tablished comfortably upon the land. 

RESOLUTIONS ON MARKETING 

We earnestly urge upon Congress the imperative need of 
a prompt and thorough investigation by the Federal Trade 
Commission assisted by the United States Department of Agri- 
culture of: 

The marketing of livestock and the meat packing 
industries in this and other countries. We urge that 
this investigation be followed by a report with con- 
structive recommendations for the improvement of the 
conditions and methods under which livestock is mar- 
keted, and the products thereof manufactured, distrib- 
uted and sold. 

Adequate Appropriation and Authority 

We urge upon Congress the making of an adequate appro- 
priation and the giving of adequate authority to the Federal 
Trade Commission to enable it to cover all important phases of 
the problem, including the experiences of other countries with 
municipal abattoirs and cooperatively owned packing plants, 
all to the end that a free and uncontrolled market may be as- 
sured, that any existing abuses may be corrected, that present 
wastes may be eliminated, and that new methods may be 
adopted. 

We further urge that the fullest publicity be given to all 
facts affecting the prices of livestock received by the producer 
and the cost of meat products paid by the consumer. 



512 MARKETING AND FARM CREDITS 



Market News on All Farm Products 

As the work of the office of markets of the United States De- 
partment of Agriculture has provided facilities for making im- 
partial reports of market conditions and prices, we recommend 
that the market news service of the office of markets be extended 
as quickly as possible to include all farm products. 

We believe that the office of markets should be authorized and 
instructed to require all handlers of farm products — including 
storage plants — to report conditions, prices, receipts and sup- 
plies on hand and such other facts as may be necessary to show 
the movement, supply and prices of farm products. 

Market Grades for Farm Products 

No standard market quotations are possible unless they are 
based upon uniform grades and a uniform interpretation of 
grades. Therefore, we recommend that as rapidly as possible 
the Office of Markets and Rural Organization of the United 
States Department of Agriculture, in cooperation with the 
state authorities, be authorized and empowered: 

(1) To extend its work of establishing market grades 
so as to cover all farm products, including meat ani- 
mals ; 

(2) To maintain in each of the principal markets of 
fieial inspectors to enforce the use of the official grades 
and to whom all disputes between producers and buyers 
as to grading may be referred for decision. 

State Market Departments 

We recommend a continuation of the establishment of divi- 
sions or bureaus of markets by the separate states to promote 
proper methods of organization among farmers; for financing 
the production and sale of, for grading, and for storing and 
distributing farm products. 



CONFERENCE RESOLUTIONS 513 



RESOLUTIONS ON MISCELLANEOUS SUBJECTS - 

We hereby protest against any legislation by Congress inter- 
fering by embargo or export dntj^ with the distribution and sale 
of foodstuffs in the markets of the world. 

Conservation 

"We protest against the passage of the Shields' and Myers' 
waterpower bills, or any substitutes for them, which fail to 
protect the public interest by requiring compensation for valu- 
able public rights and by fixing a definite time at which each 
waterpower leased shall revert to the people, so that the condi- 
tions under which it is used may be readjusted to meet the pub- 
lic needs of that time. We call upon our senators and congress- 
men to defeat the Shields' and Myers' bills and to pass water 
power legislation providing for compensation and effective time 
limits in all water right grants, together with full publicity and 
effective regulation of charges so as to prevent monopoly and 
extortion. 

WORK OF THE N. A. 0. S. 

In response to the wishes of the Conference of last year that 
some permanent organization be formed which would continue 
throughout the year the good work of the Conference, a commit- 
tee was created which has brought into existence the National 
Agricultural Organization Society. This organization has dur- 
ing the past year given scientific help in hundreds of cases and 
has brought into harmonious relations and understanding many 
agencies and organizations which would otherwise be working 
alone. It furnishes legal and other help of the highest value and 
we urge its hearty endorsement by all cooperative organizations. 

ACKNOWLEDGMENTS 

The Fourth National Conference on Marketing and Farm 
Credits has enjoyed the hospitality and service of the Hotel 
Sherman and extends thanks for favors extended by the manage- 
ment. 



514 MARKETING AND FARM CREDITS 

The Conference desires to express its thanks and appreciation 
to President McVey, Secretary Hblman and Treasurer McCar- 
thy and the officers and committee on organization for their 
faithful and efficient service in arranging for this conference 
and in doing so much to help bring it to a successful conclusion. 

The Conference has been gratified to have as its guest the 
sponsor of this Conference and its able supporter, the Honorable 
Prank P. Holland of Texas. 

COMMITTEE ON RESOLUTIONS 

Elwood Mead, Chairman, Professor of Kural Institutions; Uni- 
versity of Berkeley, California. 

Prank N. Briggs, President Interstate Trust Co.; Denver, Col- 
orado. 

H. W. TiNKHAM, New England Milk Producers' Association; 
Providence, Ehode Island. 

J. T. McKee, Florence Normal School ; Florence, Alabama. 

Hector MacPherson, Oregon Agricultural College; Corvallis, 
Oregon. 

H. J. Hughes, Editor Farm, Stock & Home; Minneapolis, Min- 
nesota. 

J. L. DuCharme, Southern Rice Growers' Association; Carlisle, 
Arkansas. 

F. P. GiLMORE, Publisher, Kentucky Farming; Louisville, Ken- 
tucky. 

W. R. Camp, Chief Division of ]\Iarkets and Rural Organization ; 
West Raleigh, North Carolina. 

M. L. Noon, Michigan Milk Producers' Association; Jackson, 
Michigan. 

Sam D. Gromer, Teacher, Agricultural College, University of 
Columbia, Missouri. 

Charles McCarthy, Chief Legislative Reference Library; 
Madison, Wisconsin. 

Prank L. McVey, (chairman ex-officio),. President, University 
of North Dakota, Grand Forks, North Dakota. 

Charles W. Holman (secretary ex-officio). Secretary, the Na- 
tional Organization Societv: Madison, Wisconsin. 



ACCREDITED DELEGATES 515 



ACCREDITED DELEG AXES -- 1 9 1 6 CONFERENCE 

ALABAMA 

Mrs. G. H. Maihis, Gadsden; farmer and field agent for Ala- 
bama Bankers' Association. 

Hamlin L. Brotvn, 1209 — First Avenue, Birmingham ; govern- 
ment extension work in the South. 

Lem A. Edmonson, 101 Court House, Birmingham; agricul- 
tural demonstration agent. 

J. T. McKee, Florence ; teacher and extension worker in Flor- 
ence Normal School. 

Max Beiherg, Cullman; farmer. 

Balph D. Quisenberry , Montgomery; syrup manufacturer 
and stockman; Montgomery Chamber of Commerce. 

Huston Taylor^ Birmingham; farmer. 

ARIZONA 

Dwight B. Heard, Phoenix; stockbreeder; president, Ameri- 
can National Livestock Association. 

ARKANSAS 

J. 8. DuCharme, Carlisle; rice planter; Southern Rice Grow- 
ers' Association. 

M. M. Rutherford, Sulphur Rock; Mountain Spring farm. 

C. 0. Carpenter, Little Rock; Agriculturist, Iron Mountain 
Ry. Co. 

CALIFORNIA 

Elwood Mead, University of California, Berkeley; professor 
of rural institutions, 

M. 8. Wildman, Stanford University; professor of economics, 
Leland Stanford Jr. University. 

CANADA 

F. H. Wienke, Stony Mountain, Manitoba, Canada; stock 
breeder, minister of agrici^lture of Manitoba. 

F. C. Hart, Parliament Building, Toronto; department of 
agriculture. 

W. J. Rutherford, Saskatoon; dean, college of agriculture. 
University. 



516 MARKETING AND FARM CREDITS 

F. G. Nunnich, Temple Building, Ottawa; agriculturist, com- 
mission of conservation. 

E. 8. Earner, 72 Fourth Avenue, Ottawa; chief of cattle divi- 
sion, livestock branch. Department of Agriculture. 
H. M. Tory, Edmonton; president of University of Alberta. 

COLORADO 

G. G. Morris, Griffith; farming and stock raising. 
Harris Kohey, Aspen ; dealer in farms. 

A. Millikin, Shirley Hotel, Denver; secretary to Governor 
Carlson. 

E. M. Ammons, Gas and Electric Building, Denver; farmer 
and livestock grower. 

J. L. Taylor, 215 Federal Building, Denver; farmer. Office of 
Markets, U. S. Department of Agriculture. 

Lou D. Sweet, 516 Equity Building, Denver; farmer and 
president, The Potato Association of America. 

G. F. Snyder, Hesperus; principal of school of agriculture. 

Andrew Norrel, Walden; rancher. 

W. M. Lampion, Denver; general freight agent, Denver & Rio 
Grande Railroad. 

Frank N. Briggs, Corner 15th and Stout Streets, Denver; 
banker. 

Gharles L. Hover, Longmont; farmer. 

E. M. Haythorn, Eaton; farming and feeding livestock. 

A. E. de Eicqles, 819 17th Street, Denver; livestock. 

Benj. E. Eohey, Aspen; merchant, Kobey Shoe and Cloth- 
ing Co. 

CONNECTICUT 

Guy C. Smith, Storrs; Connecticut Agricultural College. 

DELAWARE 

Wesley Wehh, State Capitol, Dover; secretary. State Board 
of Agriculture. 

H. Hayward, Newark; dean and director. College of Agricul- 
ture. 

DISTRICT OP COLUMBIA 

W. H. Parry, Washington ; Federal Trade Commission. 



ACCREDITED DELEGATES 517 

Charles J. Brand, United States Department of Agriculture, 
Washington; chief, Office of Markets and Rural Organization. 

J. C. Skinner, United States Department of Agriculture, 
Washington; investigator in cooperative marketing, Office of 
Markets and Rural Organization. 

Wells A. Sherman, Department of Agriculture, Washington; 
specialist, Office of Markets and Rural Organization. 

Paul V. Collins, 1330 Massachusetts Avenue, Washington; 
agricultural writer for magazines. 

F. M. Simpson, United States Department of Agriculture, in- 
vestigator. Office of Markets, Washington. 

Mrs. F. M. Simpson, 1701 Park Road, Washington. 

FLORIDA 

E, B. O'Eelley, 138 W. Bay, JacksouAdlle ; assistant agricul- 
tural and immigration agent, Atlantic Coast Line R. R. Co. 

L. C. Willimon, 902 W. Madison Street, Tampa; contractor, 
builder and farmer. 

IDAHO 

Victor J. Smith, R. R. No. 2, Burley ; farmer. 
Thomas T. Eerl, Salem; farmer. 

W. G. Scholtz, State Capitol, Boise; state director of farm 
markets. 

Clarence F. Albe, Sandpoint; farmer. 

ILLINOIS 

L. L. Lincoln, Harvard; farmer. 
John F. Sullivan, Marengo ; farmer. 
John Nogel, Dundee; farmer. 
H. H. Miller, Lock Drawer 788, Chicago; farmer, 
Wm. K. Krunfus, Barrington ; farmer. 
Wm. B. Grant, Wilmette. 
Mark McClure, Manhattan; farmer. 
E. G. Diggins, Harvard ; farmer. 

George P. Hunter, Norwood Park Station, R. R. No. 2; 
farmer. 

Thomas F. Kelly, Ashkum ; farmer. 

George S. Brainerd, Area, R. F, D. No. 2 ; farmer. 

Miss Caroline Krunnfus, Dundee; farmer. 



518 MARKETING AND FARM CREDITS 

P. Miller, 745 N. Crawford Avenue, Dixon; farmer. 
Herman C. Bench, Worth; farmer. 
B. H. Stockburger, Byron; farmer, 
Mrs. John Nogel, Dundee ; farmer. 
Mrs. Charles B. Hopper, (jlenellyn ; farmer. 
Joe Skerka, Desplaines; farmer. 
Christ. Terum, 5510 Walton Street, Chicago. 
Eoy 8. Scott, 501 E. Daniel Street, Champaign; student and 
farmer. 

Joseph Kiefer, Batavia, R. F. D. No. 1 ; farmer. 

William Boeske, Bensenville; farmer. 

J. Frank Stevens, Lake City; farmer. 

Kay McCurry, Roscoe; farmer. 

Louis Kreis, Blue Island; farmer. 

H. E. Briggs, Lake Zurick; farmer. 

Michael Leider, 440 Asbury Avenue; Evanston. 

Herman Rugen, Glenview ; farmer. 

H. F. Bergham, Lake Zurick; farmer. 

T. W. Esmond, Ottawa ; farmer. 

E. A. Wilton, Lake Villa; farmer. 

Harold Olbrich, Harvard; farmer. 

John Walker, Norwood Park, R. F. D. No. 2 ; farmer. 

W. W. Moore, Rushville ; farmer. 

H.H. Wischstadt, Itasca; farmer. 

Arthur Lamb, Bement ; farmer. 

B. H. Shoemaker, 5719 Kenwood Avenue, Chicago; farmer. 
J. C. Bench, Worth; farmer, 

C. H. Prange, Harvel ; farmer. 

J. B. Harding, 420 East Harvard, Pontiac ; retired farmer. 

A. Bragy, 1125 South Harvey Avenue, Oak Park; farmer. 
J. P. Conges, Capron; farmer. 

J. C. Sailor, Cissing Park; Pres. P. G. Association, farmer. 
P. M. Bailey, Penfield; farmer. 

H. E. Young, 1502 Lytton Building, 14 E. Jackson Blvd., 
Chicago ; farmer. 

B. W. Lyons, Waterman ; farming. 
John L. Huff or d, Cerro Gordo ; farmer. 

Albert Landmeier, Arlington Heights, R. R. No. 2; farmer. 
A. D. Cohill, Amboy; farmer, Walton Equity Exchange. 



ACCREDITED DELEGATES 519 

C. 0. Gillispio, Farmer City; farmer. 
Thomas Laml), Bement ; farmer. 
Miss Annie Glidden, Dekalb; farmer. 
Mrs. William Krumfus, Barrington; farmer. 
Henry E. Warren, Belvidere ; farmer. 

E. E. Kain, De Kalb; farmer. 

Mr. and Mrs. John Sommer, Woodstock; farmer. 

3Iax Loeh, 343-4 Marquette Building, Chicago; farmer... 

Miss Lydia Werner, Dundee; farmer. 

H. J. Werneing, Harvel; farmer. 

Fred J. Barthrig, Matteson; farmer. 

F. E. Wallace, Sandwick; farmer. 
Dan Collins, Sidell ; farmer. 
Henry Seeliavsen, Crete; farmer. 
John N. Hagan, Deering ; farmer. 
P. J. Hughes, Harvard; farmer. 
Frank S. Greeley, "Waterman; farmer. 

Fritz Gerken, 6200 Elston Avenue, Chicago; farmer. 

Gustav Landmeier , Bensenville ; farmer. ■ 

Fred M. Krueger, Morton Grove; truck farming. 

Nicholas Thinnes, 7046 Northwestern Avenue, Chicago; gar- 
dener, 

Carl Eitzema, 8600 Cottage Grove Avenue, Chicago ; gardener, 

Arthur Sass, 6019 Addison Avenue, Chicago ; truck gardener. 

J. C. Sass, 6037 Addison Street, Chicago; truck gardener. 

August Sass, 72 Avenue, Norwood Park Station, Chicago;; 
truck gardener. 

Charles Geredorf, Glenview; farmer, truck gardener. 

Fred C. Mahler, Norwood Park: farmer. 

Adam Melzer, Glenview; farmer. 

George Steil, Desplaines; gardening, 

William Eohde, Morton Grove ; truck gardener. 

Louis Welterman, Desplaines; truck gardening. 

William Tessien, 6101 Caldwell Koad, Chicago ; truck gardener. 

Max Gaitzesh, Sr., Desplaines; gardening. 

Fred A. Bachmann, Dalton ; farmer. 

Bernard Schildgem, Gross Point, Cook county ; general farmer. 

Jas. W. Long, Glenview; truck gardener. 

Wm. H. Shaw, Norwood Park. R. R. 1. Box 109 ; farmer. 



520 MARKETING AND FARM CREDITS 

William Werlrist, 6238 Legg'ett Avenue, Chicago; truck 
farmer. 

Henry Gerken, 5435 Grildings Street, Chicago; farmer. 

J. H. Buesch, Norwood Park, R. F. D. No. 2 ; market gardener. 

John Eitzema, 84th Street and St. Lawrence Avenue, Chi- 
cago; truck gardener. 

William Gewehe, Desplaines; farmer and gardener. 

Max Saitsdr, Jr., Desplaines ; truck gardener. 

August Geweke, Desplaines; truck gardener. 

Alfred 0. Stimes, Capron; farming. . 

M. E. Stech, Naperville; farmer. 

M. T. Gattull, Naperville ; farmer. 

Otto Conrad, Willow Springs ; farmer. 

Charles W. Schutt, Harvard: farmer. 

H. J. Poile, Wheaton; farmer. 

Arthur Smith, Sycamore ; farmer. 

J. J. Murphy, Waukegan: farmer. 

Michael J. McGrath, Lockport; farmer. 

J. A. Kjellstrom, Harvard ; farmer. 

E. G. Hammond, Harvard; farmer. 
Eric F. Wall, R. No. 4, Lockport : farmer. 
Charles Clansing, Arlington Heights ; farmer. 
Charles Heppner, Glen View, R. R. No. 2; farmer. 
A. H. Ah'bott, Gary Station ; farmer. 

C. N. Rood, Byron; farmer. 
Adam Schilling, Tinley Park; farmer. 
W. A. Gvadeurie, Crystal Lake ; farmer. 
James Stewart, Gary Station; farmer. 
Hy. F. Bode, Monee ; farmer. 

F. W. Boherson, Hampshire, R. No. 2; farmer. 
Drew Ten Broerk, McLean ; dairyman. 

John Erny, Marengo ; farmer. 

George D. Morris, Marengo ; farmer. 

William F. Graham, AurovR, R. R. No. 3; farmer. 

G. A. Gay, Harvard, R. F. D. : farmer. 
Hy. Krueger, Genoa; farmer. 

J. Fred McDonald, Elgin; farmer. 
H. E. Hermon, Sycamore ; farmer. 
Gustav Behlke, Mt. Prospect ; farmer. 
L. H. Papper, Area ; dairy farmer. 



ACCREDITED DELEGATES 521 

R. M. Omann, Huntley; farmer. 

J. T. Wagner, Aurora, R. D. No. 1 ; farmer. 

Q. E. Casper, Capron; farmer. 

Thomas BesKner, Walworth; farmer. 

Clinton D. Wing, St. Charles; milk producer, 

B. F. Tuttle, Poplar Grove; dairyman. 
Douglas I. Hine, Harvard; farmer. 

G. L. Henderson, Caledonia; farmer. 
James H. Driscoll; Gilbert; farmer. 
H. B. Fast, R. D. No. 2, Waukegan ; farmer. 
-H". E. Flood, Gurnee; dairy farmer. 

C. Schoenheck, Arlington; farmer. 

Wm. F. Flood, R. R. No. 2, Waukegan ; farmer, 

J. W. Schilling, Mokena; farmer. 

P. J. Brummel, Naperville; farmer. 

Rudolph Maas, Lemont; farmer. 

Edward A. Walter, 39 South La Salle Street ; dairying. 

Thomas A. Bolger, W, McHenry ; farmer, 

August Zimmermann, Harvard; farmer, 

L. Teeple, Elgin; farmer, 

E. F. Wutzke, Gurnee; dairying, 

C. J. Cooper, Genoa; farmer. 

J. C. Olbrich, Harvard; farmer and dairyman. 

W. J. Van Dusen, Antioch ; farmer. 

<7. H. Potter, 518 Chicago St., Elgin ; dairy farmer. 

Wm. H. Shaw, Edgewood Stock Farm, Belvidere; farmer. 

John Maxted, "Western Springs; dairyman. 

August Schmeckpeper, Frankfort; farmer, 

A. E. Johnson, Hebron; farmer. 

W. A. Boris, Marengo ; milk producer, farmer. 

W. H. Deneen, Marengo ; milk producer, farmer. 

J. Leland Mason, R. 3, Box 23, Elgin ; breeder Holstein cattle. 

H. A. Bates, Harvard; farmer. 

A. C. Holl, Monee ; farmer. 

Fay Faulkner, Byron; farmer. 

Ira R. Tanner, Aurora; farmer. 

E. 0. Hawkins, Lake Villa, Lake Co. ; farmer. 

James Driscoll, Gilberts, Kane county; farmer. 

Ralph Allen, Delavan ; farmer. 

J. W. Gilbert, Raymond; farmer. 



522 MARKETING AND FARM CREDITS 

Charles Eelmel, Harvel ; farmer. 
John Miller, 828 West Division, Galva ; farmer. 
Herman Meyer, Leonard; manager. 
CJmrles Adkins, R. R. No. 1, Bement ; farmer. 
Richard L. Crampton, 208 So. La Salle Street, Chicago; sec- 
retary, Illinois Bankers' Association. 

B. von Herff, 1901 McCormick Building, Chicago ; agricul- 
tural chemist. 

F. S. Betz, 514 Lake Street, Oak Park; American Coopera- 
tive Auditing Association. 

W. M. Stickney, 52-54 Board of Trade, Chicago; grain com- 
mission. 

Edward S. Love joy, 2600 S. State Street, Chicago; railway 
mail service. 

Charles E. Snyder, Chicago; editor, Farmers' Review. 

,L. G. Ellison, Mattoon, Coles county; chairman, Road and 
Bridge Commission. 

C. M. McLennan, Union Stock Yards, Chicago; managing 
editor, American Sheep Breeder. 

Dennis Hayes, 4647 Maiden Street, Chicago ; supt. of police. 

Jno. G. Thompson, 1206 S. Orchard Street, Ilrbana; instruc- 
tor L'niversity of Illinois. 

C. 0. Holmes, 10856 South jNIichigan Avenue, Chicago; land 
development. 

•George W. Simon, 706 W. 12tl'i, Street, Chicago; western 
manager. Jewish Agricultural and Industrial Aid Society. 

Arch E. Fichards, 105 South La Salle, Chicago; investment 
securities. 

William George. 233 Downes Place, Aurora ; president, Sec- 
ond National Bank, farmer. 

L. D. Jacohson, 3452 N. Troy Street, Chicago; credit man. 

Mildred M. Veitch, 1714 Lytton Building, Chicago; Farmers' 
Review. 

J. A. Odell, 1805 Hinman Avenue, Evanston; ranchman. 

Peter P. Fenovich, 745 E. 63rd Street, Chicago ; restaurant. 

Carl Colvin, 903 Harrison Street, Charleston; teacher of 
agriculture. 

Melvin Byder, No. 11 Chalmers Place, Chicago. 

A. N. Steinhart, Bloomington; Sec'y. Illinois Farmers' G-rain 
Dealers' Association. 



ACCREDITED DELEGATES 523 

Ernest W. D. Laufer, M. B. Ph. D., 208 South La Salle Street, 
Chicago; agronomist. 

Maude J. Nichols, Greenwood Inn, Evanston; member, Wo- 
man's National Farm and Garden Association. 

J. C. Baker, Taylor Ridge: farmers' grain elevator company. 

J. W. Henceroth, 916 Postal TelegrajDh Bldg., Chicago ; agron- 
omist. 

Albert E. Lindquist, 141 W. Ohio, Chicago; journalism, Bet- 
ter Farming. 

Mrs. Clara A. Luces, 155 N. Clark Street, Chicago ; lecturer 
for Union Pacific. 

E. Gleits7nun M. D., 3940 N. Monticello Avenue, Chicago; 
physician, 

M. F. Horme, Union Stock Yards, Chicago; Statistician of 
Union Stock Yard & Transit Company. 

Charles N. Waity, Sheldon; furniture salesman and farming. 

Mrs. W. B. Voshnegh, 321 South Grove Avenue, Oak Park. 

Robert H. Ford, 9041 South Hoyne Avenue, Chicago; civil 
engineer. 

Grace 31. Tomehill, 810 Leland Avenue, Chicago; stenogra- 
pher. 

Charles N. Haskins, 3030 Ellis Avenue, Chicago ; teacher and 
organizer. 

F. A. Bingham, Rockford; vice-president. Farmers' Coopera- 
tive Packing Company. 

T. Denise, German Kali "Works, 1901 ]McCormick Building,. 
Chicago ; agronomist. 

Genevieve Turner, 6812 Normal Boulevard, Chicago; recrea- 
tion worker. 

H. H. Russel, Arlington Heights ; clerk. 

J. H. Greene, M. D., 715 Washington Blvd., Urbana. 

Wm. E. Castle, 619 Woodlawn Avenue, Chicago; retired. 

George N. Coffey, 1210 Springfield Avenue, Urbana; assist- 
ant state leader for county advisers. 

George E. Hooker, 31 5 Plymouth Court, Chicago ; secretary. 
City Club. 

John Nicholson, 38 South Wabash Avenue, Chicago; grain 
conditioner. 



524 MARKETING AND FARM CREDITS 

Arthur Fisher, 1130 Corn Exchange Bank Bldg., Chicago; 
lawyer. 

Mathias O. Gabler, 7351: Union Avenue, Chicago. 

Albert 0. Roberts, 5606 Peoria Street, Chicago; market 
assistant. 

F. H. Abbott, 537 South Dearborn Street, Chicago; western 
manager Southern Settlement and Development organization. 

A. B. Osterberg, Industrial Department Santa Fe Railway, 
1115 Railway Exchange Building, Chicago. 

James Russell Price, 6309 Wentworth Avenue, Chicago; 
physician and surgeon. 

Mrs. George Griesenauer, 5006 Catalpa Avenue, Chicago. 

F. R. Keebler, 220 North State Street, Chicago; market assist- 
ant. United States Department of Agriculture. 

Judson F. Lee, 161 Lorel Avenue, Chicago; professor of 
economics. 

G. C. Clegg, 234 South Clark Street, Chicago; city passenger 
agent, 0. R. I. and Western Vac. Railroad. 

Ernest E. Olp, 2324 Park Place, Evanston ; business and farm- 
ing in Alabama. 

James F. Mallaney, Kankakee ; farmer and grain inspector. 

Frank 0. Lokay, 3935 Cornelia Avenue, Chicago; clerk. Com- 
monwealth Edison Company. 

W. A. Bertman, 326 South Racine Avenue, Chicago ; water 
transportation Lakes to Gulf. 

/. G. Marshall, 136 W. Lake Street, Chicago; clerk. 

S. V. Hurt, Mendota. 

/. M. Lobaugh, High Street and Western Avenue, Blue 
Island; banker. 

0. E. Hesse, 5208 S. Ridgeway Avenue, Chicago ; credit man. 

CUjford Hatfield, 19 South La Salle Street, Chicago ; secretary 
T. M. C. A. 

E. E. R. Tratman, 1144 Monadnock Block, Chicago ; editor, 
Engineering News. 

Mrs. George G. Phillips, 6463 Kenwood Avenue, Chicago-, 
Chicago Woman's City Club. 

Harry I. Herman, 22 South Water Street, Chicago; editor, 
Chicago Produce Bulletin. 

Mrs. A. L. Messier, 3411 Adams Street, Chicago. 



ACCREDITED DELEGATES 525 

George Broivn, 247 State Street, Sycamore; lawyer, engaged 
in farming also. 

A. ^Y. Hansen, 112 "W. Adams Street, Chicago; secretary- 
treasurer, Farm Mortgage Bankers' Association of America. 

John Hedlicka, 613 Whitman Street, Rockfordj secretary- 
treasurer. Farmers' Cooperative Packing Company. 

C. W. Marson, 1743 W. 95th Place, Chicago; landscape gar- 
dener. 

A. W. Harrison, 7218 South Park Avenue, Chicago. 

D. 0. Thompson, 301-305 Griesheim Building, Bloomington ,- 
county agricultural agent. 

J. D. BiWborrow, 1210 Springfield Avenue, Urbana; college 
of agriculture. 

J. 8. Zapt, 6555 Ingieside Avenue, Chicago; credit man. 

E. C. Cook, 327 South La Salle Street, Chicago; managing 
editor. Railway Journal. 

George 8. Speer, 10 South La Salle Street, Chicago; bond 
dealer and land owner. 
Herman Yaliz, Plato Center; insurance and farming. 

E. Jose, Chicago Commons, Chicago; superintendent of 
schools. 

W. J. Jarvis, Hinsdale; railroad. 

Boy H. Jones, 317 East Marion Street, Monticello; grain 
dealer. 

W. F. Covins, 200 N. 22nd Street, Mattoon; shipper of pro- 
duce. 

H. W. Danforth, Washington; president, National Council of 
Farmers' Cooperative Associations. 

F. W. Stout, Ashkum; manager, Farmers' Cooperative Grain 
Company. 

/. H. Nafziger, Anchor; grain dealer. 

J. A. Henehy, Plainfield; grain. 

C. H. Levin, 800 Security Building ; advertiser. 

Millard B. Myers, 230 South La Salle Street, Chicago ; editor,. 
American Cooperative Journal. 

Bohert A. Worstall, 2500 W. Railroad Avenue, Evanston; 
chemist. 

A. Suhring, Peoria; farm loan manager. 

J. C. Hart, 3030 Cottage Grove Avenue, Chicago; publisher. 



526 MARKETING AND FARM CREDITS 

M. V. Hale, 141 South Clark, Chicago. 

Mrs. E. H. Nicol, 5406 Forest Glen Avenue, Chicago; house- 
keeper. 

L. G. Kreuter, 1228 Green Street, Rockford; engineer. 

H. G. McManus, Union Stock Yards, Chicago ; packing meats. 

Garrie B. Flanegin, 5420 North Lawler Avenue, Chicago. 

E. G. Rockwell, 5344 Dorchester Avenue, Chicago ; lawyer. 
Edward H. Sherwood, 230 South La Salle Street, Chicago; 

advertising manager, American Cooperative Journal. 

Alexander Jackson, Chicago ; general immigration agent. Rock 
Island Lines. 

Dr. G. G. Sweeting, Milwaukee Avenue, Liberty ville ; physi- 
cian and surgeon. 

F. Edwin Ahy, 5227 Indiana Avenue, Chicago; manager, fer- 
tilizer department. 

Arthur E. Pattison, People's Trust and Savings Bank, Chi- 
cago; manager,' Farm Mortgage Department. 
.Florence NesMtt, 1007 County Building, Chicago; dietitian. 

Dwight Sanderson, 1109 East 54th Place, Chicago; fellow in 
sociology. University of Chicago. 

S. P. Gunningham, Penfield; manager, Farmers' Elevator 
Company. 

John G. Glair, Chicago; industrial commissioner, Illinois Cen- 
tral Railroad. 

/. W. Newtnan, 404 Rufee Block, Chicago. 

/. W. Overacker, Danforth; manager. Farmers' Elevator 
Company. 

L. P. Kay, 1432 Masonic Temple, Chicago; teacher. 

W. J. Kittle, 640—29 South La Salle Street, Chicago ; secre- 
tary. Milk Producers Association. 

W. W. Duhl, Naperville; clergyman. 

Fred Niederhauser, 1353 Argyle Street, Chicago; writer, 

E. G. Platter, 111 W. Monroe Street, Chicago; insurance. 

Jos. E. Gonnell, 5605 Drexel Avenue, Chicago; journalist. 

Victor S. Yarros. Hull House, Chicago ; newspaperman and 
lawyer. 

Eaton G. Osman, 327 South La Salle Street, Chicago; editor, 
Price Current Grain Reporter. 

Fred A. Gurtis, 243 North Pine Avenue, Chicago. 



ACCREDITED DELEGATES 527 

Harry G. Bell, 916-917 Postal Telegraph Building, Ciiicago ; 
agronomist, National Fertilizer Association. 

Richard N. Magill, Boom 502 Federal Building, Chicago ; 
central department, secretary, Military Training Camps' Asso- 
ciation. 

W. T. Seibels, 192 North Clark Street, Chicago; publishers' 
representative. 

Mrs. Alfred H. Grass, 1100 Kidge Avenue, Evanston; mem- 
ber. Council of Woman's National Farm and Garden Associa- 
tion. 

H. J. Schiuietert, 135 Park Row, Chicago; traveling indus- 
trial and immigration agent, Illinois Central Railway. 

Levi N evens Leivis, 848 North La Salle Street, Chicago ; busi- 
ness manager. 

Charles A. Eiving, Decatur; lawyer and farmer. 

Harry A. Lipsky, 1214 South Halsted Street, Chicago; pub- 
lisher. 

W. D. King, 3926 W. Chicago Avenue, Chicago; accountant. 

C. B. Stafford, Wilmette; attorney. 

Lajos Steiner, 1304 Garland Building, Chicago; commissioner 
for immigrants, Union Pacific System. 

B. E. Hieronymus, 106 Commerce Boulevard, Urbana; com- 
munity adviser, University of Illinois. 

George E. Warren, 210 South La Salle Street, Chicago; civil 
■engineer. 

J. E. Bergquist, 2258 West 111th Place, Chicago; secretary, 
Beaver Syndicate — farm mortgage and irrigated lands. 

Guy Huston, Blandinsville ; farm loans, banking. 

D. F. Siveetland, 2259 South Kildare, Chicago ; literature dis- 
tributer. ti»i^ 

G. L. Busian, 29 East Madison Street, Chicago ; advertising 
manager, The Weland Separator Company. 

Clyde A. Waugh, 916 Postal Telegraph Building, Chicago; 
Soil Improvement Committee. 

L. F. Bacon, 1115 Railway Exchange, Chicago: assistant 
agent, Sante Fe Railway. 

Karl M. Mitchell, 121 N. Menard Avenue. Chicago; manage- 
ment engineer.. 



528 MARKETING AND FARM CREDITS 

Samson Liph, 1243 North Wood Street, Chicago; superin- 
tendent, Jewish Educational Alliance. 

Wm. Gourlay, 29 W. Monroe Street, Chicago; general traffic 
agent, American Express. 

John E. Barrett, Prairie View; president. Farmers' Insti- 
tute. 

L. Edward Lashman, 1228 Tribune Building, Chicago ; social 
service secretary. 

Michael Freund, 1140 South Michigan Avenue, Chicago ; em- 
ployment supervisor, Immigrants' Protective League, Chicago, 

Richard Pride, 431 South Dearborn Street, Chicago; editor, 
American Elevator and Grain Trade. 

Walter L. Fisher, 1130— 134th South La Salle Street, Chi- 
cago, attorney at law. 

W. J. Smith, 912 Harris Trust Building, Chicago; industrial 
agent, W, F. Co. Exchange. 

W. F. Tedder, Webster Building, Chicago ; American Coop- 
erative Organization Bureau. 

Frank B. White, 76 West Monroe Street, Chicago; Agricul- 
tural Publishers' Association. 

J. W. Porter, Pontiac; farmer and stockman. 

H. B. Grommon, Plainfield; farmer and stockman. 

Frank S. Haynes, Genesee; farmer. 

I. D. Wehster, Pleasant Hill; farmer and stockman. 

C. 0. Gillispie, Farmer City; farmer and stockman. 

Robert C. Runkle, Littleton; farmer and stockman. 

W. S. Tasker, 7015 Yale Avenue, Chicago; farmer. 

F. C. Elahn, R. F. D. No. 2, Dundee; farmer. 

Daniel C. Gilly, Barrington; farmer. 

John Welinsk, Dundee Eoad, Mount Prospect; farmer. 

A. H. Dysant, Standard; manager, farmers' elevator company. 

Henry E. Kondolf, 570 Seneca Parlnvay, Rochester; grower, 

Fred W. Holm, 115 Street, Worth; farmer. 

Daniel A. Holm, 115 Street, Worth ; farmer. 

F. H. Reese, Dundee ; banker and farmer. 

INDIANA 

F. G. King, 408 Russell Street, Lafayette ; experimentalist in 
livestock feeding. 



ACCREDITED DELEGATES 529 

Chester G. Starr, Purdue University, Lafayette; extension 
work in agriculture. 

G. 1. Christie, Purdue University, Lafayette; superintendent 
of agricultural extension. 

C. A. McC otter, 811 Board of Trade, Indianapolis; fire insur- 
ance of grain elevators. 

A. W. McKeand, 816 Merchants Bank Building, Indianapolis ; 
advertiser and organization counselor. 

James W. Sale, Bluffton; grain dealer. 

A. W. Walls, La Crosse. 

John H. Bouhur, courthouse South Bend ; county agricultural 
agent. 

Sam. B. Woods, Crown Point; farmer and dairyman. 

Frank 31. Chase, 227 W. Washington Street, Indianapolis; 
editor. 

George Weymouth, Spencer; editor. Farm Life. 

George C. Bryant, 416 Federal Building, Indianapolis; field 
agent, United States Department of Agriculture. 

James W. Brendel, Zionsville ; farmer and banker. 

C. C. Churchill, Chesterton ; farmer. 

/. S. Bohhins, McCool; farmer. 

S. F. Henwood, Syracuse; livestock farmer and fruit grower. 

Francis W. Poivers, 128 W. Grant Street, "West LaFayette; 
farm manager. 

Thomas Line, 2436 Gay Street, Fort Wayne ; farmer. 

E. M. Smith, Advance; farmer. 
L. F. Malone, Westville; farmer. 

J. M. Thompson, Columbus ; farmer and banker. 
Samuel C. Scott, R. R-. No. 6, Huntington ; farmer and stock- 
man. 

Roy W. Sherburne, R. No. 5, Crown Point; dairyman. 

F. E. Wiehenhisen, 920 Grieford Street, Huntington; farmer 
and merchant. 

William Neivton, Crown Point ; dairy farmer. 
August Trager, Hobart; farmer. 

Mr. and Mrs. Clarence I. Hammett, Hammett Home Farm 
Road, CraAvfordsville ; farmers and stock raisers. 
Wallis A. Hall, Crown Point; farmer, . 
Fred Kraft, Hobart; farmer. 



530 MARKETING AND FARM CREDITS 

P. J. Shaw, 2217 North Delaware street, Indianapolis; farmer. 

E. 8. Groxton, Angola : farmer. 

IOWA 

H. G. Adams, Algona ; banker and real estate. 
A. M. Price, De Witt; banker. 

A. J. Gole, Britt; physician. 

James H. Shoemaker, Box 146, Cedar Falls ; human relations 
engineer for small telephone companies. 

Clifford Thome, State House, Des Moines. 

W. B. Barney, Dairy and Food Commissioner, Des Moines. 

J. P. Gagen, 610 — 16th street, Des Moines ; city market mas- 
ter. 

F. L. Eaton, 2402 Jackson street, Sioux City ; president, Stock 
Yards Co. 

F. H. Fitzgerald, Pocahontas; grain buyer. 

Frank G. Gooley, Fort Dodge ; grain commission merchant. 
W. E. Glinn, Havelock; grain buyer. 

Frank M. Myers, 614 First National Bank Building, Fort 
Dodge; secretary. Farmers' Grain Dealers' Association of Iowa. 

B. M. Gunn, Buckengham; farmer. 

W. P. Dawson, ' ' Fair Acres, ' ' Aurelia ; farmer and stockman. 

E. D. Baird, South English ; stock and banking. 

A. Sykes, Ida Grove ; teacher and feeder ; president, Corn Belt 
Meat Producers' Association. 

Gharles G. Gockerill, Jefferson; feeder, farmer. 
Warren Nichols, Minerva ; farmer. 

G. H. Burge, Mt. Vernon; breeder of Shorthorn cattle. 

F. D. Steen, West Liberty; farmer. 
J. A. White, South Amana ; farmer. 

G. W. Swan, Custon; farmer. 

John S. Homann, Manilli ; farmer and cattle raiser. 

B. B. Blair, 224 E. 15th street, Davenport; farmer. 
Millard Peck, 402 Station "A," Ames; instructor in rural 

economics, Iowa State College. 

C. B. Williams. 517 Welch Avenue, Ames; teacher of eco- 
nomics. 

J. 0. Eankin, Iowa State College, Ames; associate professor 
of agricultural economics. 



AGCREDITBD DELEGATES 531 

B. J. Leth, Ames; instructor, farm management. 
B. A. Pearson, Ames ; president, Iowa State College. 
Hugh G. Van Pelt, Waterloo; editor, Kimball's Dairy Farmer. 
Alson Secor, Des Moines; editor. Successful Farming. 
James Atkinson, 1912 Grand Avenue, Des Moines; editor. 
Henry C. Wallace, Des Moines; editor, Wallace's Farmer. 

KANSAS 

E. L. Barrier, Eureka; farmer and stockman. 
H. W. Avery, Wakefield; farmer. 

J. E. Whitman, Preston; farmer. 
Wm. J. Too, Maple Hill; farmer. 
/. H. Mercer, Topeka; farmer and feeder. 
W. F. Byers, 312 West ISth Street, Topeka. 
J. B. Marcellus, 1007 Commerce Building, Kansas City; dis- 
trict engineer, Portland Cement Association. 

F. B. Nichols, Topeka ; associate editor. Capper Farm Papers. 
Theodore Macklin, 114 South Sth Street, Manhattan; teacher 

and investigator in marketing and agricultural economics. 

George E. Putnam., 1502 Mann Street, Lawrence; university 
instructor of economics. 

W. A. Cochel, Manhattan; professor of animal husbandry, 
Kansas State Agricultural College. 

KENTUCKY 

T. L. Hornshy, Eminence; farmer, livestock breeder. 

/. Lewis Letterle, Harrods Creek; livestock breeder and 
farmer. 

/. W. Netvman, Rose Hill, Versailles; farmer. 

James A. McKee, Versailles; farmer and cooperator. 

James Short, Crestiuood, R. R. No. 2 ; farmer. 

Philip B. Weessen, Jr., Shelbyville ; dairyman and farmer. 

J. W. Whitehouse, Berea ; teacher of agriculture. 

M. 0. Hughes, 1405 State, Bowling Green ; district agent, farm 
demonstration work. 

Fred Mutchler, director of agricultural extension, experiment 
station, Lexington; College of Agriculture. 

F. F. Gilmore, 407 Commercial Building, Louisville; pub- 
lisher, Kentucky Farming. 

J. S. Crenshaw, Cadiz; banker. 



532 MARKETING AND FARM CREDITS 

E. L. Varney, Cadiz; county agent. 
Wayland RJwads, Independence; county agent. 
John U. Field, experiment station, Lexington; state field 
agent in marketing. 

LOUISIANA 

L. N. Ford, Hibernia Bank Building, New Orleans; agricul- 
tural engineer. 

Turner Wright, University station, Baton Eouge; field agent 
in marketing, United States Department of Agriculture. 

E. L. Jordan, No. 25 Bungalow Lane, Baton Rouge ; professor 
of animal industry, Louisiana State University. 

W, B. Dodson, Baton Rouge; dean college of agriculture^ 
Louisiana State University. 

Harry 0. Wilson, Baton Rouge; commissioner of agriculture 
and immigration. 

W. R. Linch, Shreveport; president, Louisiana State Fair. 

MAINE 

C, E. Embree, Waterville ; farm organizer. 

MARYLAND 

Dr. Samuel S. Buckley, College Park; animal industry exten- 
sion. 

James B. Morman, Kensington; editor. Federal Farm Loan 
Board. 

M. H. Manss, Baltimore ; Baltimore and Ohio Building, as- 
sistant to vice president, Baltimore and Ohio Railroad. 

MASSACHUSETTS 

T. N. Carver, 7 Kirkland Road, Cambridge; economist. Har- 
vard University, 

Alden C. Butt, 30 Morton, No. Abington; farmer and fruit 
inspector. 

C. J. Grant, 244 Main Street, Springfield; agricultural ad- 
visor. 

Alexander E. Cance, Massachusetts Agricultural College, Am- 
herst; professor agricultural economics. 

MICHIGAN 

E. B. Hill, Menominee ; county agricultural agent. 



AOCRBDITED DELEGATES 533 

V. H. Church, Eoom 1, P. 0. Building, Lansing ; field agent, 
United States Department of Agriculture. 

James Wade Weston, Marquette; assistant leader of county 
agents. 

G. E. Prater, Jr., Paw Paw ; manager, the Wolverine Cooper- 
ative Company. 

A. M. Leslie, Northport; horticulturist. 

W. M. Hartman, Grand Eapids ; A. & I. agent, G. R. & I. Ry. 

0, /. Monroe, South Haven ; farming and banking. 

Fred M. Warner, Farmington- farmer. 

E. D. Cheney, Hillsdale; farmer and cooperative livestock 
shipper. 

A. Gorge, Jr., Langly Avenue, St. Joseph; mechanical engi- 
neer and fruit grower. 

W. C. Kempster, Coldwater; farmer. 

James N. McBride, East Lansing; farmer, state market di- 
rector, Michigan. 

Milo D. Campbell, Chicago Street, Coldwater; dairy farming. 

A. M. Welch, 230 Bast Michigan Street, Ionia; farmer and 
stockman. 

W. B. Roach, Hart; farmer and canned foods. 

W. B. Liverance, 435 Powers Building, Grand Rapids; man- 
ager. Cooperative Association of Creameries. 

D. D. Aitkin, Flint; lawyer. 

N. P. Hull, 210 N. Logan, Lansing; milk producer. 

W. W. Wentworth, Battle Creek. 

M. L. Noon, Jackson; R. F. D.,' president, Michigan Milk 
Producers' Association. 

Carl J. Martin, 72 E. Pearl Street, Coldwater; secretary- 
treasurer, Coldwater Cooperative Co. 

Willmer 0. Hedrick, East Lansing; teacher of economics. 

A. C. Anderson, 278 Grand River Avenue, East Lansing; 
teacher, dairy husbandry. 

Ralph W, Peterson, E. Lansing; instructor, Michigan Agri- 
cultural College. 

Dudley E. Waters, Grand Rapids National City Bank, Grand 
Rapids. 



534 MARKETING AND FARM CREDITS 

MINNESOTA 

Andrew S. Johnson, Round Lake; livestock buying and feed- 
ing. 

8. H. Greeley, 207 Virginia Avenue, St. Paul. 

S. S. Beach, Hutcliinson; farmer; Hutchinson Livestock 
Shipping Association. 

Simon Olson, Storden; farmer. 

J. P. Harrison, Excelsior; farmer. 

H. J. Farmer, Airlie; farmer, secretary, Minnesota Grain 
Dealers' Association. 

James Slat en, Mendota; farmer. 

J. E. McMahr, North St. Paul; Ramsey Co. Farm. 
" Edward Enoivlan, St. Paul; dairyman. 

F. B. McLean, Wrenshall; dairy farm, Maplewood Farm. 

George H. Eliuell, 907 7th Street, Minneapolis ; milk producer. 

E. M. Christian, 45th and Reservoir Blvd., Minneapolis; 
dairyman. 

E. Dana Durand, University of Minnesota, Minneapolis; 
economist, 

Andrew Boss, 1443 Raymond Avenue, St, Paul; educator, 
University of Minnesota. 

Casper Frederickson, 1206 5th Street, S. E. Minneapolis; 
student in agriculture. University of Minnesota. 

Mrs. E. M. Tousley, 3649 Park Avenue, Minneapolis. 

R. C. Pollock, Farmington; county agricultural agent. 

K. A. Kirkpatrick, Room 30, courthouse, IMinneapolis ; county 
agricultural agent. 

H. B. Leonard, Stillwater; county agent. 
' Harry A. Kunn, White Bear; county agent, Ramsey county. 

Dan A. Wallace, St. Paul ; editor, The Farmer. 

Hugh J. Hughes, 830 Hennepin Avenue, Minneapolis ; editor, 
Farm, Stock and Home. 
. M. C. Cutting, St. Paul; editorial department, The Farmer. 

CUfford Willis, 602 Oneida Building, Minneapolis ; editor, 
Northwest Farmstead. 

E. M. Tousley, 811 McKnight Building, Minneapolis; editor 
and lecturer on Corjperation. 



ACCREDITED DELEGATES 535 

Jos. A. Jeffery, 901 Fidelity Building, Duluth; land commis- 
sioner, Duluth, South Shore and Atlantic Railway. 

L. B. Arnard, Walow Building, Duluth; land commissioner. 

D. E. Willard, St. Paul; development agent, Northern Pacific 
Railway. 

MISSISSIPPI 

L. Cothern, Jackson, assistant agriculturist for Illinois Cen- 
tral Railroad. 

J. M. Eigley, Jackson ; assistant agriculturist for Illinois Cen- 
tral Railroad. 

Jno. A. Wehh, Jackson. 

Chas. N. Brumfield, Jackson; agriculturist, Illinois Central 
Railroad. 

MISSOURI 

Win. C. Hall, 1740 Railway Exchange, St. Louis; market 
agent. 

W. L. Nelson, Columbia; assistant secretary, agriculture. 

Chas. F. Hatfield, 614 Commercial Building, St. Louis; sec- 
retary and general manager, St. Louis Publicity and Conven- 
tions Bureau. 

J. 8. Boyd, 3347 Olive Street, Kansas City; claim adjuster. 

George K. Andrews, 1047 Railway Exchange, St. Louis; agri- 
cultural commissioner, IMissouri Pacific Railway. 

D. G. Welty, 1047 Railway Exchange, St. Louis ; commissioner 
of agriculture, St. Louis, Iron Mountain and Southern Railway. 

J. Kelly Wright, 817 Virginia Avenue, Columbia; farmers' 
institute lecturer, Missouri State Board of Agriculture. 

S. M. Jordan, Dumos Apartments, Columbia; farmers' insti- 
tute lecturer. 

Philip H. Hale, 3550 Vista Avenue, St. Louis; editor. Na- 
tional Farmer and Stock Grower. 

M. L. McClure, Kansas City; livestock commission, president, 
the National Livestock Exchange. 

E. A. Trowbridge, Agricultural Building, Columbia; pro- 
fessor animal husbandry, University of Missouri. 

S. T. Simpson, Agricultural Building. Columbia ; animal hus- 
bandman, University of Missouri. 



536 MARKETING AND FARM CREDITS 

0. E. Johnson, 210 Edgewood, Columbia; teacher, Missouri 
College of Agriculture. 

Samuel D. Gromer, 1205 Keiser Avenue, Columbia; teacher 
and farmer. 

G. G. Cfillam, Maryville ; banking and farm loan. 

J. Boiert Hall, 203 College Avenue, Columbia; secretary, 
•Missouri Farmers' Exchange. 

E. Martindale, Kansas City. 

Mr. and Mrs. T. B. Ra^iMn, Tarkio ; farmer, 

B. W. Brown, Carrollton: farmer, secretary, American Gal- 
loway Breeders' Association, 

B. P. Smoot, Centralia; farmer. 

B. M. hide, Jr., St. Louis. 

Dr. A. W. Nelson, Bunceton; farmer and stockman. 

John P. Cooper, Horine: farmer. 

Fred B. Miller, R. R. No. 1, Sumner ; farmer and stockman. 

MONTANA 

George E. Piper, Glendive ; county agriculturist. 
W. L. Beers, 2702— 2nd Avenue South, Great Falls; farmer. 
B. C. White, Buffalo; farmer and woolgrower. 
Geo. Horkan, Volberg; stock grower. 

M. L. Wilson, Bozeman; agricultural extension, Agricultural 
College; stock grower. 

NEBRASKA 

J. H. Krause, Alliance; ranchman. 

Samuel B. McEelvie, Lincoln; publisher, The Nebraska 
Farmer. 

Edward L. Burke, 488 Boarden Theater Bldg., Omaha; live- 
stock. 

E. Buckingham^ LTnion Stockyards Co., South Omaha ; vice 
president and general manager. 

William Shdl, Omaha; farmer and banker. 

Lucien Stehhins, 705 West F St., No. Platte; farmer. 

George Jackson, Nelson ; merchandiseman. 

W. B. Mellor, State House. Lincoln; secretary, Nebraska 
State Board Agriculture. 

H. C. Filley, University Farm. Lincoln; professor farm man- 
agement. University of Nebraska. 



ACCREDITED DELEGATES 537 

J. H. Fraundsen, Lincoln; professor of dairying, University 
of Nebraska. 

NEW HAMPSHIRE 

Wm. H. Caldwell, Peterboro; secretary, American Guernsey- 
Cattle Club. 

NEW JERSEY 

Robert D. Ment, 150 Boulevard, Passaic ; banker. 

Emerson P. Harris, 16 Rockledge Road, Montclair ; president, 
Montclair Cooperative Store. 

C. F. Seahrook, Bridgeton; vegetable grower and general 
farming. 

NEW MEXICO 

Frank Johnson, San Marcial; banker. 
C. M. O'Donel, Bell Ranch; ranch manager. 
P. B. Barber J Las Cruces ; county agriculturist. 
J. R. Welch, Forrest; farmer. 

NEW YORK 

John Collier, 70 — 5th Avenue, New York City. 

Rulto Robinson, 70 — 5th Avenue, New York City; people's in- 
stitute. 

Mrs. James T. Mumford, 40 West 45th Street, New York 
City; extension secretary. National Civic Federation. 

Mrs. L. Van Rensselaer, 105 West 40th Street, New York 
City; field secretary, National Woman's Department. 

Frederick C. Howe, Ellis Island; U. S. commissioner of im- 
migration. 

Edward F. Sanderson, 125 Remsen Street, Brooklyn; people's 
institute. 

Gwendell Bush, Little Falls; farmer, New York Dairymen's 
League. 

A. L. Brockway, 3d National Bank Bldg., Syracuse ; Holstein- 
Friesian breeder. 

Julius H. Barnes, 105 Produce Exchange Bldg., New York 
City. 

P. C. Long, 2 West 45 Street, New York City ; secretary, Na- 
tional Agricultural Society. 



538 MARKETING AND FARM CREDITS 

Thomas J. Sandford, Sherman, New York; farmer and at- 
torney. 

Harry B. Winters, 61 South Lake Avenue, Albany; deputy 
commissioner of agriculture. 

Eroy H. Anderson, Room 100 New York Central Station, 
Rochester; agricultural agent, New York Central Railroad. 

G. N. Laiiman, Ithaca; professor in Cornell University. 

Leonard G. Bohinson, 174 Second Avenue, New York City; 
lawyer and general manager. 

yictor K. McElhen/y, Jr., 204 Franklin Street, New York 
City ; president, The National Association of Fruit Auction Com- 
panies. 

NORTH CAROLINA 

Win. R. Camp, Raleigh ; chief, division of markets. 

NORTH DAKOTA 

Mrs. J. I. Cahill, Leith. 

J. I. Cahill, Leith; manager. Farmers' Elevator Company. 

W. B. Shaw^ Rhame; banker. 

F. W, CatMe, Bottineau; banker. 

James E. Boyle, 1014 — 11th Avenue North, Fargo ; field agent 
in marketing. 

Lynn J. Frazier, Hoople; farmer, Governor of North Dakota. 

John R. Voegeli, Mott; farmer and cheese manufacturer. 

A. F. Thomas, Deering; farmer. 

W. Inysh, Bismarck; department of agriculture. 
■George McFarland, 1005 Fifth Avenue, Valley City; presi- 
dent, State Normal School. 

Thomas Cooper, Fargo ; director, North Dakota Experiment 
Station. 

M. H. Gesaman, Ruder; president, Ruder Cooperative Co. 

W. R. Pater, 824 — 11th Street, Fargo; superintendent, N. 
Dakota State Demonstration Farms. 

N. C. Macdonald, Valley City; state superintendent of Pub- 
lic Institutions. 

Frank L. McYey, Grand Forks; president, State University. 

OHIO 

Peter Small, Chesterland; farmer and breeder. 



ACCREDITED DELEGATES 539 

H. W. Ingersoll, Elyria ; farmer. 

Newton L. Bunnell, Lebanon; farmer. 

E. R. Bathrick, Akron; farmer. 

W. E. Loose, Napoleon; banker and farmer. 

E. S. Todd, Oxford; professor economics, INIiami University. 

Charles S. Latchaiv, Defiance; general manager, Farmers' Co- 
operative Company. 

J. T. Falconer, Ohio State University, Columbus ; instructor. 

Clark S. Wheeler^ Ohio State University, Columbus; director 
agricultural extension. 

William G. Byers, New York Central Building, Cleveland ; 
agricultural agent, New York Central Lines. 

John F. Cunningham., 1011 Oregon Avenue, Cleveland ; edi- 
tor, The Ohio Farmer. 

Galen 0. Gilbert, 1605 Keyser Avenue, Columbia ; student in 
agriculture. 

OKLAHOMA 

Carl Williams, Oklahoma City; editor, Oklahoma Farmer and 
Stockman. 
James A Wilson, Stillwater ; director agricultural extension. 
Hoivard S. Browne, Norman; teacher. University of Oklahoma. 

OREGON 

Elector Macpherson, Oregon Agricultural College, Corvallis; 
director, Bureau of Organization of Markets. 
W. W. Earrah, 616 Tustin, Pendleton; farmer. 
Wm. Eanley, "W. Burns; cattle. 

PENNSYLVANIA 

C. E. Gapen, Philadelphia ; representing Country Gentleman, 
M. W. Stark, Tunkhannoch; farmer. 
James Thomas, Boswell; farmer. 

Charles M. Smith, Lewistown ; fruit grower and gardener. 
Robert W. Lohr, Boswell; farmer. 
Gifford Pinchot, Milford; forester. 

3Irs. W. B. Elliot, "Williamsfield ; representing The Farmer's 
Wife. 

W. B. Elliot, "Williamsfield ; farmer and breeder. 



540 MARKETING AND FARM CREDITS 

Clarence Sears Kates, Glenloch, Chester county; farmer. 

Ediuard E. Walker, 121 North 7th Street, Philadelphia ; pub- 
lisher, The Practical Farmer. 

Lomis A. Klein, Uuiversity of Pennsylvania, Philadelphia; 
professor in University. 

Charles W. Baldwin, Room 115, City Hall, Philadelphia; 
superintendent of markets. 

Harry L. Busterholtz, 31 W. 10th Street, Erie; postal clerk. 

WilUam J. Rose, 413 Market Street, Harrisburg; division 
freight agent, Pennsylvania Road. 

A. B. Hess, 78 West Queen, Chambersburg ; superintendent 
of schools. 

8. 8. Fehman, Y. M. C.A., Erie; extension representative. 

TT. H. Tomhave, 502 South Allen Street, State College ; edu- 
cational work. 

Fred Basmussen, State College ; professor of dairy husbandry. 

M. 8. McDowell, State College ; director agricultural extension,- 

F. P. Weaver, department of agriculture, .extension. State 
College; agricultural extension work. 

E. 8. Bayard, 110 Sherdy Avenue, Pittsburg; editor. The 
Farmer and Stockman. 

J. M. Stauffer, 10 South Front Street; food products. 

C. J. Marshall, 4th and North Street, state veterinarian, Har- 
risburg. 

Charles A. McBride, 355 Greenville ; county agent. 

RHODE ISLAND 

H. W. Tiiikham, "Warren. 

SOUTH DAKOTA 

E. O. McCollum, Wolcott; farmer. 

B. M. Crawford, R. 1, Brookings ; farmer. 
John T. Belk, Henry ; farmer. 

Isaac Lincoln, Aberdeen; banker and farmer. 
W. 8. Hill, Mitchell ; farmer and banker. 
H. F. Patterson, Aberdeen; farmer. 
0. 8. Anderson, Plankinton ; farmer. 

Elmer Kendall Eyerly, Vermillion; professor of economics, 
University of South Dakota. 



ACCREDITED DELEGATES 54I 

E. H. Day, Clerk; president, Clerk County Farmers' Elevator 
Company. 

Chas. McCaffree, Pierre ; commissioner of immigration. 

Julius H. Johnson, Stanley County Agricultural Association^ 
Fort Pierre; attorney-at-law. 

Hayes Brothers, Grandfield; stockmen. 

Alii Beed, Sturgis ; editor, Call-To- Action, 

R. S. Vessey, 718 Bittersweet, Chicago ; rating agency work. 

Mr. and Mrs. A. W. Palm, Watertown; county agricultural 
agent. 

TENNESSEE 

E. A. Miller, 103 East 4tli Street, Knoxville ; horticulturist. 

Wm. A. Schoenfeld, Knoxville; specialist in marketing and 
rural organization, division of extension. 

L. C. Gray, Nashville; teacher, George Peabody College. 

W. K. Tate, 1502 18th Avenue, Nashville; rural educator. 

G. B. Harper, 714 Grand Central Station, Memphis, 

Tait Butler, P, 0. Box 935, Memphis; agricultural editor. 

Nutz Bowen, Memphis, Box 935 ; secretary Southern. Cattle- 
men 's Association. 

C. H. Moran, Dresden; farmer. 

E. B. Bitmore, Newhern ; farmer. 

C. G. Preso'ott, 206 James Building, Chattanooga; general 
agricultural agent. 

Joseph H. Judd, Nashville ; special agricultural agent. 

L. P. Bellah, Nashville; general agent, N. C. & St. L. Ry. 

Chevy Chase, Nashville ; agricultural agent, N. C. & St. L. Ry. 
Union Station. 

TEXAS 

Will Smith, Anchor ; farmer. 

W. W. Evans, Dallas ; agricultural agent, M. K. & T. Ry. 

Col. B. E. L. Knight, Dallas; farmer. 

A. W. Augspurger, 401 Scanlan Building, Houston; farmer. 

C. C. French, College Station ; pig club agent. 

J. C. Hestand and son, Sherman; breeder hogs and cattle. 

Charles Bartlett, R. R. Dallas; farmer. 

J. W. Bagsdale, Waco ; farmer. 



542 MARKETING AND FARM CREDITS 

S, M. Eliot, College Station ; extension worker. 

E. J. Buckinglmm, Brady Building ; San Antonio ; real estate. 

Ed. G. Lasater, Falfurrias; ranchman. 

H. G. Poe, 518 N. 7tli, Temple ; banker. 

/. B. Gompton, 1924 Cedar Springs, Dallas; druggist. 

H. H. Williamson, United States Department of Agriculture 
and Texas A. & M. Boy's Club Work, College Station. 

Golonel Frank P. Holland, Dallas; president, Texas Farm and 
Ranch Publishing Company. 

UTAH 

E. B. Brossard, Logan; farm management demonstrator. 
W. E. Garroll, Utah Agricultural College; Logan. 

John T. Gaine, III, College Hill, Logan; director, extension 
division. 

VERMONT 

Mogens R. Tolstrup, St. Albans ; field agent in marketing. 

VIRGINIA 

F. H. LaBaume, N. & W. Bldg., Roanoke ; agricultural agent, 
Norfolk and Western Railway. 

Gharles H. Bucher, Capitol Bldg., Richmond; chief clerk. 

WASHINGTON 

David Broivn, Herdwood Avenue, Spokane; farmer. 
P. B. Pratt, Ferndale ; farmer. 

WEST VIRGINIA 

A. J. Dadisman, Morgantown; teacher. 

J. Taff Janney, Martinsburg; secretary-treasurer. 

Garleton G. Pierce, Kingwood; orchardist. 

WISCONSIN 

G. Norgord, Department of Agriculture, Madison; commis- 
sioner of agriculture. 

C. B. Atkinson, 1625 Grand Avenue, Milwaukee; dean, College 
of Economics, Marquette University. 

H. 0. Watrud, 301 Lake St., Madison ; Agricultural Extension 
Worker. 

H. E. Erdmann, 619 W. Johnson Street, Madison; Assistant 
in Agricultural Economics, University of Wisconsin. 



AOCREDITBD DELEGATES 543 

Elizabeth B. Kelley, 425 Sterling Court, Madison; assistant 
professor in charge Household Economics, Extension Work, 
College of Agriculture. 

B. H. HihTjard, University of Wisconsin; professor of agricul- 
tural economics. 

James 8. Heckey, 225 Lake Lawn Place, Madison; student. 

E. Russell Koeniger, 222 Lake Lawn Place; student. 

Ralph Nafziger, 124 Breeze Terrace, Madison ; student. 

J. Earl Wells, 225 Lake Lawn Place, Madison, student. 

G. A. Laescher, 619 Lake Street, Madison; student. 

H. A. Uloehlenpah, Clinton; banker.. 

J. Russell Wheeler, Columbia; president, Wisconsin Bankers' 
Association; banker. 

Charles McCarthy, box 380, Madison ; legislative librarian. 

Charles W. Holman, 340 Washington Bldg., Madison; secre- 
tary, National Agricultural Organization Society. 

Cha^. A. Lyman, Ehinelander, general organizer N. A. 0. S., 
Madison, Wis. 

Mrs. Chas. A. Lyman, Rhinelander, Wis. 

H. E. Holmes, Madison ; business manager, Wisconsin Society 
of Equity. 

Geo. D. Bartlett, 410 Pabst Bldg., Milwaukee. 

Chas. R. Schroeter, 202 North Ave., Madison; inspector, Mil- 
waukee Street Construction Co. 

G. R. Rice, 1422 First National Bank, Milwaukee; secretary 
and treasurer, Milwaukee Milk and Cream Shippers' Association. 

Herm^an L. Ekern, Madison ; lawyer. 

J. H. Fitzgihhon, 224 35th St., Milwaukee ; organizing farmer, 
A. S. of E. 

C. L. Burlingham, Fort Atkinson ; agricultural editor. 
W. E. Palmer, Elkhorn; farmer. 

Chas. L. Turn, Elkhorn ; farmer. 

Oscar Leedle, Zenda ; farmer. 

Paul F. Garin, Walworth; farmer. 

P. H. Tahin, Kenosha ; farmer. 

Emil Frei, Brooklyn ; farmer. 

B. S. Benson, Bristol; farmer. 

James B. Cheesman, 1229 Wisconsin Street, Racine; farmer. 



544 MARKETING AND FARM CREDITS 

Edward A. Fitzpatrick, 610 Leonard Street, Madison; secre- 
tary, National Society for Training for Public Service. 
Bernard Echer, Route No. 13, Caledonia ; farmer. 

D. R. Kimball, Genoa Junction ; farmer. 
G. A. Schulz, Adell; farmer. 

H. B. Dixon, Somers; farmer. 

John Zunk, Kenosha, Route 4; farmer. 

Boland E. Lee, Corliss, Route 5 ; farmer. 

Henry Krumrey, Plymouth; farmer, president, Wisconsin 
Cheese Producers' Association. 

G. H. Te Stroet, Cedar Grove; farmer. 
. B. B. Melvin, Greenbush; farmer. 

Mr. and Mrs. W. B. Bowley; Racine, Route 3 ; farmer. 

Joe Osterhuis, Waldo; farmer. 

Geo. McKerrow, Pewaukee ; farmer and stock breeder. 

W. L. Ames, Oregon; farmer. 

J. J. SchelUng, Racine, Route 2, Box 56 ; dairyman. 

Moulton B. Goff, Sturgeon Bay ; farmer. 

A. T. Carlson, Augusta; farmer. 

/. T. Klug, Cedar Grove; farmer. 

E. J. Keyes, Plymouth; farmer. 
L. W. Krake, Glidden; farmer. 
H, 0. Natesta, Clinton; farmer. 

Wm. J. Bolters, Burlington, Route 20, Box 104; farmer. 
C. H. Omams, North Lake; farmer. 
Bicliard T. Ely, IMadison ; professor. 
Hieron J. Block, Burlington; farmer. 
John S. Donald, Mount Horeb ; farmer. 
Bert Miller, Honey Creek; farmer. 
Frank Edwards, Burlington, Route 17; farmer. 
Lawrence L. Wiensers, Burlington, Route 17 ; farmer. 
J. 0. Parrish, Plymouth; farmer. 

Frank T. Holt, Kenosha; farmer, acting president, The Milk 
Producers' Association of the Chicago Dairy District. 
C. 0. Moe, Burlington ; farmer. 
G. F. Boivman, Bassett; farmer. 
8. P. Beese, Highland Park, Clinton ; milk producer. 
H. G. Olson, Burlington, Route 22; farmer. 
Harding Crotv, Pleasant Prairie; farmer. 



ACCREDITED DELEGATES 545 

M. E. Kinney, Lake Geneva; farmer. 
Harvey A. Nelson, Union Grove ; farmer. 
Louis Hess, South Milwaukee, Eoute 14; farmer. 
E. S. Bobbins, Elm Grove; farmer. 
0. S. Gridley, Wauwatosa; farmer. 
Walter Dittmar, South JNIilwaukee, Route 16 ; farmer. 
Albert A. Fuller, Hartland; farmer. 
Laurence B. Dorey, Salem; farmer. 
A. Paddock, Salem; farmer. 
Harry D. Dunbar, Elkhorn; farmer. 

Joseph Williams, Oakwood, Route 18, Milwaukee; farmer. 
Ben Kaun, Hales Corners; farmer. 

J. B. Tankering, Burlington, Route 20, Box 64; farmer. 
Chas. Hartmann, Brookfield; dairyman. 
Gust Neu, Brookfield ; dairjauan. 
E. C. Gittens, Bristol; dairyman. 
0. J. Warren, Neillsville; farmer. 
J. F. Wegge, Burlington, Route Star; farmer. 
Ben Lang, IMarshfield, Route 4; farmer and cooperative live- 
stock shipper. 

J. Cummings, Delavan; farmer. 

Gilbert A. Bunkel, Burlington, Route 19 ; dairyman. 

John Ehler, Burlington; farmer. 

G. A. Turnock, Kansasville ; farmer. 

John M. Manus, Kansasville ; farmer. 

Henry Tighe, Kansasville ; farmer. 

James Gabrielson, Union Grove; farmer, 

D. Martin, Union Grove; farmer. 

Ira D. Brown, Salem; farmer. . 

Sam Strenstra, "Walworth ; dairyman. 

Albert T. Meyer, Lyons; farmer. 

J. F. Schaefer, Lyons; farmer. 

Otto Andre, Spencer; farmer. 

0. E. Harrison, Genoa Junction; farmer. 

John Murphy, Center St., Lake Geneva ; farmer. 

Herman J. Pfanzelter, Lyons ; farmer. 

A. C. Bussell, Augusta; farmer. 

Boy H. Beebe, Eagle River; colonization agent. 



546 MARKETING AND FARM CREDITS 

WYOMING 

A. D. Faville, Laramie; teacher, 

John E. Higgins, Glenrock; stockraiser and rancher. 

Governor J. B. Kendrick, Cheyenne ; governor. 

A. W. Augspurger, Laramie. 

John A. Schiuartz, Barrington; farmer and dairyman.* 



* The number who attended the 1916 Conference is conservatively 
estimated at over 2,00'0. At times the congestion was so great it was 
impossible to register more than one person in five. 



i 



Tiiv) :■',■' ', 





